Having a large amount of credit card debt can be overwhelming. Every month you faithfully make the minimum payments but the balances never seem to go down. If you are serious about ways to eliminate credit card debt for good there are several options available to help you reach your goal. The key to reaching your goal and staying on track is to be consistent. Make a plan and stick to it!
Your credit score plays an important role in determining which options you will have available to eliminate credit card debt. The following are the most common for those with good credit.
Credit Card Debt Elimination Strategies
A balance transfer is the simplest means of lowering your interest rate and consolidating your balances. If you have a good credit score you may be able to qualify for a balance transfer to another credit card with a very low or 0% introductory rate. The introductory period usually lasts from 6 to 12 months. During this time, you pay little or no interest on your balance so will save a considerable amount because your entire payment is going straight to the principal balance. Be sure to read the terms of the offer carefully. Some credit card companies charge large transfer fees. You will also want to make sure that the post introductory rate is lower than the rate you are currently paying.
Home Equity Loan or Home Refinance
If you are a home owner and have equity built up in your home, one of these options might work well for you. Home loans are usually at a much lower interest rate than credit cards so will save you a lot of money. The interest you do pay may also be tax deductible.
A home equity loan will be in addition to your mortgage and will likely have a slightly higher interest rate than your primary mortgage.
Refinancing your home to pay off credit cards is called a cash-out refinance. This will be a total refinancing of your mortgage. The balance you owe on your home and the equity you have accrued will determine how much you will be able to get out in cash. This would offer the lowest interest rate available in most cases.
Credit Card Consolidation Loan
This type of loan is an unsecured personal loan used specifically for paying off your credit cards. Being unsecured, the interest rates will be higher, but unlike a home equity or refinance loan, you do not risk losing your home if you default on your payments.
If you have poor credit, one of the following may be suitable for your situation.
In a credit counseling program you work with a credit counselor to set up payment arrangements on your debts. A reputable firm will not charge up front fees and will work with your creditors to get interest your rates reduced and stop collection calls. Typically you make one payment per month through the program and they pay your creditors for you.
When you enroll in this type of plan, the debt settlement firm will negotiate with your creditors to get your outstanding balances reduced and lower the interest rates on the remaining balance. You will make payments to the debt settlement firm that are held in an account until the agreed upon amount is reached, then they pay off your creditors for you.
Those are just a few ways to eliminate credit card debt, if you’d like to learn more, click the home link and find out more debt consolidation strategies.
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