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Help With Lowering Credit Card Balances

by Genevieve Rice

Overview

Paying off a large credit card debt can be overwhelming. And with mounting finance, over-the-limit and large charges, the amount can keep growing. If you're looking for help with paying off credit card debt, there are several ways to lower your balances and get out of debt without resorting to extreme measures such as bankruptcy. Consider consolidating your credit card debt and other debt management techniques to help pay off your credit cards faster.
Balance Transfer Credit Cards

Consolidate your credit debt by transferring your credit card balances to one credit card with a low-balance transfer interest rate. Several credit cards such as the Discover More card or the Citi Platinum Select Card offer an introductory interest rate of 0 percent on all balance transfers for six months to one year, helping you save on finance charges while paying down your debt. However, balance transfer cards work best when the introductory period in which the rate applies is enough to pay off your debt completely. After the introductory period ends, the annual purchase interest rate will apply. Also, some cards charge a balance transfer fee, usually a small percentage of the transferred balance. Although several companies cap this fee at $50 or $75, some companies do not, resulting in balance fees of several hundred dollars for large credit card balances. Before using this method to consolidate debts, know exactly how long the introductory period is, what interest rates apply and when and how fees are incurred.

Home Equity Loan and Lines of Credit

Consider taking out a home equity loan or line of credit to pay off credit card debts. Structured like a mortgage, a home equity loan allows you to borrow a stated amount of money from your home's equity for a fixed rate over a period of time. A home equity line of credit allows you to make charges against your home's equity as needed. Both home equity loans and lines of credit offer lower interest rates than credit cards, slowing the growth of your debt and making it more manageable. Also, the interest is tax-deductible. However, borrowing against your home can be a dangerous game. If you can't make the payments on your home interest loan or line of credit, you could lose your home. Also, the outstanding balance of home equity loans and lines of credit are due when you sell your home. Draft a payment plan you are certain you can make before using your home as collateral.
Personal Loans

Obtain a personal loan to help cover credit card debt. Offering lower interest rates than credit cards, personal loans are also relatively easy to get, even for borrowers with less-than-perfect credit. However, the interest rate for a personal loan is still higher than a home equity loan.
Negotiating with Creditors

Set up a lower, more manageable payment plan by talking with your creditors about your debt situation, especially if you are already behind on payments. Explain calmly that you are having trouble making your credit card payments. Offer an amount you can pay. In some cases, you can negotiate balances to 70 percent of what you owe. If you do negotiate with creditors, always keep records of your correspondence, including which representatives you spoke with and the agreed-upon negotiated balance.
Other Ways to Lower Your Credit Card Balances

Discontinue using your credit cards any further so you won't incur any more debt. Draft a budget that allows you to pay all your expenses with cash, and set up an emergency fund for out-of-the-ordinary expenses that would normally be charged to your credit card. Pay more than the minimum payment of your credit cards to reduce interest. Break the cycle of deficit spending by cutting down on expenses until your debt is paid off.