Do You Need Lower Credit Card Payments?
07/19/09
Are you sick of carrying a huge balance on your credit cards, and never seeing the numbers go down? Do most of your payments go toward your interest, leaving your debt almost untouched? You can do something about your problem. Saving money on your credit cards doesn't have to be complicated, and there are a number of ways you can do it.
The most straightforward method is to pay a little extra each month. If you have a balance of $7,000 and a 14% interest rate, paying $150 per month will pay off your credit card in 68 months and cost you $10,200. However, if you increase your payments by just $25 per month, it will take you 54 months and $9,450 to pay off your credit card balance.
"If I had the money, I wouldn't have this credit card balance!" you say. That's reasonable. Most of us have more immediate financial concerns; the amount we pay each month matters more than the total amount we will eventually pay to clear the debt. To lower your monthly credit card payment, the key is getting a lower interest rate. You have a few methods to choose from:
* Roll the balance over to a credit card with a lower interest rate. Take into account the rollover fees, which can be substantial, and find a balance transfer offer that waives the fees, if you can. The very best offers of this kind are the promotional offers that give you an extremely low interest rate on balances added to the card during an initial grace period, and keep the interest rate low for the life of the balance.
* Request a lower interest rate from your current credit card issuer. You have the best chance of succeeding with this method if you have a good credit history, have been with the issuer for a year or two, and have a few credit card offers from other companies that offer substantially lower interest rates. Tell the customer service representatives that other companies are offering you better deals, and you are considering transferring to them. Often, the representative will be able to negotiate a better deal with you. (If the first representative who answers isn't able to help you, politely thank them, and call again at a different time. Other representatives may have more leeway or may know a loophole in the regulations that the first representative didn't know about.) In the worst case scenario, the credit card company cannot lower your rates, so you simply go on paying them as before and find a better card to switch to.
* Call your credit card company and ask for help. If your financial situation is extremely bad and you are unable to make your monthly payments, the credit card company may be willing to work out an emergency arrangement with you in which they lower your monthly payments for a set period. This is only for use in the worst circumstances, when you are at risk of defaulting on your credit card otherwise. You may face severe penalties, such as a reduction in your available credit or a closing of your credit line, and your credit rating will suffer. However, it's preferable to defaulting on your loan, and can get you through a tough time.
It will take you a bit of patience, persistence, and effort to save money on your credit cards. However, soon you will have a better deal, and will be on your way to considerable savings and greater peace of mind.
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