Getting Out From Under Credit Card Debt

Getting into debt with your credit cards is simple. Lately it seems that there’s always a new pre-approved offer showing up in the mail, either from a major bank, card company like Discover, or from stores who want you to spend, spend, spend. It can make you feel like you’re pretty much a fiscally responsible person. After all, they wouldn’t be sending these cards to you if you weren’t, right? So, off you go, and when the paycheck doesn’t quite cover things, you put little things like gas and groceries on the cards, too. Before you know it, you’re running four and five figure balances on every piece of plastic you own and that check’s going mostly on servicing that debt.

Whoops.

You’re not alone. The average credit card debt per American household is $16,140, with total credit card debt for the nation at $918.5 billion dollars.

However, there are ways to get out from under without filing for a personal bankruptcy. It takes time and a lot of changes to your lifestyle, but you can do it. These figures can be interpreted as an increase in consumer spending against the 2012 figure of $849.8 billion, which can be good as increased spending can equal more jobs. Taken another way, Americans are not getting the fiscal education they need to stay out of five figures of high interest, unsecured debt.

1. Target one card at a time. Make minimum payments on your other cards, but give the one with the lowest balance a big blitz of payments. Then, when it’s paid off, move on to the next card.
2. If you need to improve a sagging credit rating, start paying off the card with the highest utilization score. Divide the balance by the card’s limit, and then figure out how much can go toward paying it down while still making the minimums on your other plastic parasites.
3. Interest is a killer, and if you have a credit score of 730 or better, you may be able to lower your interest rates with a simple phone call to your card company. Remember, card companies are highly competitive, and if you have another company offering you a lower rate, you can use that as a negotiating point.
4. Many cards offer an attractive interest rate if you transfer a balance from one card to another. It can save you big on interest payments, but there are a few caveats. The new interest rate may not apply to purchases made with that card, and there’s generally a window of 12-18 months to pay down your transferred balance. After that, those low rates could go sky high.
5. You may be able to consolidate your debt up to $35,000 with a loan from a peer-to-peer lender, naturally it means another chunk of debt, but instead of multiple payments with multiple interest rates, it gives you one payment and wipes out hundreds or thousands in interest.

Any and all of these steps should be combined with credit counseling, and a change in lifestyle so that this doesn’t turn into a cycle of debt. Bankruptcy is an extreme step, and one that should only be undertaken if there are no real alternatives for repayment.

At Van Horn Law group, we really hope these steps work for you.