Help is available to people who want to eliminate their credit card debt. Some reach out to credit counseling agencies, whereas others use the equity in their homes, acquiring extra money with a cash-out refinance. While these methods are useful when getting rid of debt, some agencies charge a monthly fee for assisting debtors, and refinancing a home loan to eliminate debt involves expensive fees. However, there are tactics to get rid of debt for free.
Strategies to Get a Lower Interest Rate
The amount of interest you pay on credit cards each month plays a role in debt elimination. Interest fees are costly, and if you're only paying the minimum payment each month, the bulk of each payment only reduces the interest charges for the month, not the principal balance. Acquiring a lower rate on your credit cards helps you pay down the balance quicker because creditors will apply a larger percentage of payments to your principal. Different methods can help you get a better rate. You can take the direct approach and call your creditors to request a better rate. If this doesn't work, start comparing credit card offers and transfer your balance to a low-rate card.
Review Spending Habits
You can control debt by simply controlling your spending. Rather than buy every item on your wish list with a credit card, practice self control and save for major purchases. Buying items with cash alleviates high debts and interest payments. Credit use helps build a credit history, but if unable to control your spending with credit, it's best to put away credit cards. Disregarding offers for new lines of credit and placing all credit cards in a locked box helps curtail spending. Ask someone you trust to hide the cards or simply cut the cards in half.
Monthly Payment Amounts
Don't expect quick debt relief if you're only able to pay your minimum each month. Eliminating credit card debts will require forwarding higher payments until the debt dissolves. Understandably, not everyone is in a position to drop a lump sum on their debts each month. Still, it doesn't hurt to review your budget and think of ways to cut back. An extra $50 a month on top of a $20 minimum payment can reduce a $1,000 credit card balance in about 14 months.
Personal Sacrifice
Eliminating high credit card balances will involve some sort of personal sacrifice. Depending on the amount you owe, you may consider sacrificing your free time and acquiring part-time employment to bring in additional cash to pay off a large debt. If you normally take yearly vacations or enjoy treating yourself to an expensive luxury, you may forgo these and put the money towards debt elimination.
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