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The Smart Way To Pay Down Your Debts

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Millions of consumers are still working hard to get out from under the financial burdens they faced, often through no fault of their own, throughout the recession and the years following. But there should be a bit of strategy applied when attempting to get out of significant credit card debt.

Many consumers still have significant balances on their credit cards and are now looking to reduce them in relatively short periods of time. While it is certainly possible to do so, it also takes careful consideration and dedication to effectively reduce credit card debt to manageable levels.

Perhaps the easiest way to do so is for consumers to take a close look at all aspects of their finances. This should include first doing a check of their Credit Report Card, which can identify why their score has been hurt in the past. The second step is examining how much they pay for everything in their lives and seeing if they are able to reduce their obligations in a number of ways so that they have more money to contribute to their credit card bills at the end of every month. Of course, this should also be done while keeping in mind how quickly they would like to be out from under those debt burdens, because this will will significantly impact how much needs to be freed up from other areas.

It may also be a good idea to start seeking out new credit card deals, particularly for those who have a strong credit rating already as a result of careful management of their accounts in the past. In many cases, it may be possible for borrowers with good scores to find a deal that comes with an introductory interest rate as low as 0 percent for as long as 24 months, which can be extremely helpful in reducing the balances they carry on other cards without adding any more interest charges. However, those seeking this kind of deal should also expect to pay the 3 percent balance transfer fee that comes with most of these accounts.

[Credit Cards: Research and compare balance transfer credit cards at Credit.com.]

Further, consumers should also make sure they do not add to their balances with any additional spending when they get a balance transfer card. That’s because these transactions likely come with the account’s standard interest rate, which will typically be somewhat elevated from normal credit cards. Balance transfer cards should only be used to reduce debt during the introductory period.

Image: Pattybot, via Flickr

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  • http://MSN Shirley J. Gates

    I presently Have Line of credit, with Us Bank, I really misused my Line of Credit. to pay some balances on other accounts. didn’t read the fine print, and the interest rates, seems to keep going up, nothing has been charged to any of may three accounts. since last July, 2011, I have not charged on any cresit card or Line of credit,. I have put myslef on a very tight budget and spare money goes on my card. . I have a wonderful card with Capitol one, and all the charge is 5%. How do I get U S bank to lower my rate 14.00 %. I do all of my banking with them, I can’t seems to talk with anyone, that could give me any considertion, on how to help. all on alcance of Ballance transfer, and I used my line of credit, when I need extr a money. It was just attached to my chicking accunt, purchases and advance. I am 79 years olf and I have a exellent credit rating, never late on a payment,, Please can you give a Free Credit report.

    • Joe Cowen

      US Bank does not have a steller reputation for being customer friendly. I found that out when I went to cash a check issued by one of there depositors. Find a commumity bank or credit union and phase out your US Bank account. Stay away from the big banks until they are forced to change their ways.

    • Baby Campbell

      if your bank is not willing to work with you, look else where. Shop around. Transfer the balance owe with another institution. you have excellent credit that can open doors to u. I know the feeling. I had similar issue with my bank while purchasing a house.

    • Cyndy Romano

      I would agree with both of the previous responses and add a bit as well. I LOVE my credit union for the personal touch they offer and the low rates. However, credit unions generally have a higher bar to qualify for their financial products. With your excellent credit rating this should not be a deterrent for you. On the other hand there are some awfully good promotional deals being offered currently [through the end of Sept & into Oct 2012]. Discover, usually 4-5% balance transfer fee, is offering 3% transfer fee for 18 mos. Bank of America is offering $75 max transfer fee with a 3.99%. Either way, these or others you choose – you’d be money ahead to transfer all or some of that loan to another institution in as many “lump transfers” as you need. Just be sure to NOT TOUCH those cards for anything else and to set your payment schedule so as to get them paid off or paid down in the time specified in the promo. Paid down enough to transfer into a credit union who’s program you qualify for, or a bank I suppose, or another promo offered to you down the road – although you can’t RELY on that. One other IMPORTANT detail is to make sure you are absolutely certain as of the payoff DATE detailed in the promo. Some of that loan documentation if intentionally ambiguous, in my opinion. I call frequently – especially as the end gets closer – and then I plan for atleast 2 weeks beforehand so I don’t get zapped with all the accrued, deferred interest. Good Luck Shirley 😉 It seems like you have the where-with-all AND the financial, self-discipline to make this work.

  • Gloria Robinson

    Thank you for these helpful tips!


    Chase will not entertain lowering interest rate after requesting for one two time and know that I can transfer my balance to a lower interest card but it is a hassle.
    I have never missed a payment and always within my limits so let me know how I can twist their arm?

    • Gerri Detweiler


      I’d suggest looking into other options. If your credit is fairly strong, a personal loan could be a good alternative. I wrote about how to shop for a personal loan here.

  • Karen D

    I have many credit cards and when I had no job only a few of them would help me and I realized that if they don’t help I’m in shit luck…I have paid down and did pay off most of the..the high % interst ones…I have 1 that will not budge 19% …Care Credit (GEMoney)It is getting paid but it’s taking awhile for that one…I will tell you today from my mistakes do not get credit cards they will break you with the high %%%% rates…thank your leader ..the BANKS had one year to figure out what they could do with us suckers that have CC…Now I said it and I’m glad…I will be free in one year and you all think I’m going to use theses cards again no way you lost a good customer….

    Thank you

    • Gerri Detweiler

      Sometimes paying off debt is your best revenge!

  • Marie

    Made a big mistake. Even though had lots of credit cards, never late, credit score was good and still able to get loans, etc. Wanted to pay off debt, so went with a credit counseling firm which lowered interest rates, (account balances were not lowered as with consolidation loans) but all accounts had to be closed. Have now paid off about 60% of outstanding debt and cannot get a car loan. They don’t tell you that you would be better off declaring bankruptcy.

  • Norma

    I have too much credit card debt with high interest. I applied for a loan to consolidate all into one payment, I didn’t get it because of something on my credit report. My payments are always on time by using auto payments. Sears raised the interest to 16.24%, Chase raised theirs to 29.99% and there is no talking them down either. I plan not to use either of the cards again now or after they are paid off.
    How can they charge such high interest on credit cards when the saving account is paying 1.25%?

  • Rita

    How can you re-establish credit after a divorce. 4 years ago before my divorce, my ex and I purchased a vehicle together. We decided that he would keep the vehicle and continue to make the payments and keep our credit good. Last year, and after the divorce, he stopped making payments. Now, this vehicle is on my credit report with a balance of $7,000. Can this be fixed or do I just wait until it falls off in 2014.

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