People use credit cards for many reasons: to handle emergency situations, to pay for necessities when cash is short, to make special one-time purchases, to live beyond their means for whatever reason. Despite all these different motivations, one thing many credit card users have in common is quite a bit of stress-inducing debt. If you're looking for some relief from your debt and the anxiety and bad credit score that may come with it, here are some things you might want to try. I have used of a few of these techniques and feel better for it.
- Pay the balance. Okay, this hint falls into the category of "easier said than done." Chances are if you're feeling the credit card pinch and used credit to begin with, relief isn't going to come your way in the form of a big balance payoff anytime soon. But look at your debt more carefully. See if you have one small balance card that you could conceivably pay off in a month or two (even if it hurts a little). Try it. Not only will clearing the balance relieve the debt stress from that card, but it will free up capital to clear some of the other debts, too. It's sort of a domino effect. Plus, balance-free cards can help raise the ol' credit score (if you don't close them once they're zeroed out).
- Negotiate with the card company for better rates or fee waivers, etc. Most money experts you hear these days are big advocates of debtors like us getting on the phone and asking credit card companies to cut us some slack. I haven't had too much success with this method, but I only tried it once. I know several people who did come up with some great relief through negotiating. What are you negotiating for, you may ask? It could be anything: waiving of a late fee one month, waiving of an over-limit fee permanently, lower monthly payments, lower interest rates. You ask for it, you might just get it. This isn't because the card companies necessarily care about you (yeah, right...) But, if you're so crushed with debt that you can't pay anything, the card company will settle for something rather than nothing. There's also the "take my business elsewhere" threat, too. So, try it out and see what happens. Relief could be on the way from the source of your debt itself!
- Transfer your balance to one of your other cards. In some cases, transferring credit debt from one card to another one you already have may seem like robbing Peter to pay Paul. But there are times when this can work to your advantage. For instance, if you have one card with a low interest rate, why not make a transfer from a higher card and get yourself some relief? If you're over-limit on one card, maybe a transfer is a good way to get rid of those nasty over-limit fees by switching the over-limit portion of the balance to a card with some free space. Of course, before you make a transfer, check what fees and rates apply, or you may end up making a less-than-helpful move.
- Find a new card with better terms. I have quite a bit of credit card debt, but that doesn't stop credit card companies from trying to get my business. In a few cases this last year, they succeeded in their attempts. I found cards with the holy trinity of terms: low introductory APRs (provided I pay on time every month), no annual fee, and no fee on balance transfers. I took these cards up on their offers, transferring my two highest (and longest-lived) card balances. It made a huge difference in how much I pay per month. And now I have two balance-free cards, which helps my credit score.
- Arrange a debt management plan through a counseling agency. I haven't used debt management, but everything I read tells me this is not the first thing to try when seeking debt relief. In fact, next to bankruptcy, it may be the last thing to try and may have a negative impact on your credit history. Debt counselors are professionals who help people get out of debt. Finding a good one requires a lot of research (check out the Better Business Bureau listing, see if they're accredited, etc.) Once you find a good counselor, she may suggest a debt management plan wherein they negotiate payment dates and rates with your creditors and then pay the creditors through a dispersement of a payment you make them each month. This may work to your advantage if you get fees waived and more time to pay your debts, etc. But, as I just mentioned, it may have a bad effect on your credit history and if attempted through a disreputable agency, it might end up costing you a lot of money (many agencies, good and bad, charge fees.). So, buyer beware when it comes to debt management plans.
If you go to bed worrying about your credit card debt, well, chill out, for one, because all that stress isn't healthy. But after you chill out, get proactive by trying a variety of different techniques to get some debt relief. Taking control of your credit card debt is often the first step to making sure that credit card debt doesn't have control of you.