Credit card debt can be reduced through lower rates or
negotiating for reduced balances. With reduced interest, you can
pay off the principal quicker with the same monthly payment. The
other approach is debt settlement, which eliminates part of your
debt at the cost of your credit score.
1. Transfer Balances
Credit card companies are always offering introductory deals,
such as 0% on transfers. Usually such offers last for several
months, giving you the chance to make sizeable payments on your
principal.
If you have several credit cards, choose to transfer the account
with the smallest amount. Pay off that account, then take that
card's monthly payment and apply it to your next lowest balance.
Soon you will be creating a snowball affect, swiftly lowering
your debt. Make sure to close paid off accounts to raise your
credit score and keep from adding to your debt.
2. Negotiate Lower Rates
Credit card companies are also willing to lower rates. You can
try to do this on your own, but you will have more success with
a debt management company. For a monthly fee, they will lower
rates with credit card companies and handle your monthly
payments.
Debt management plans can affect your credit temporarily if your
creditors report delayed or reduced payments. This might prevent
you from opening new accounts for a year or more. However, with
such plans you can be out of short term debt in less than five
years with a much better credit score.
3. Settle For Reduction In Debt
Debt negotiation is the most drastic step to lower your credit
card debt since it has long term affects on your credit. A debt
negotiation company can settle some of your debt with creditors.
Lenders will then report the reduced amount to the credit
reporting agencies, which will keep it on your record for seven
years. Debt negotiation is similar to bankruptcy and can prevent
you from qualifying for conventional credit for a couple of
years.
Reducing your credit card debt will have long term benefits for
you. Less credit means better rates when you do want to apply
for financing, especially with a home or car purchase. No matter
which option you choose, research companies carefully and
compare their services and fees.
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