Pay-off Your Credit Card Debt Today

Facing massive credit card debt puts a strain on personal finances. It is natural to be overwhelmed by the feeling that you have hit a brick wall with nowhere further to go. Besides bankruptcy the system allows for some leeway and the options available vary depending on one’s financial situation and the creditor’s policies. All options will impact to your credit score. Moreover, the card company will freeze your credit line, and the portion of the forgiven debt will be taxable under federal law. Nevertheless, be responsible and seek help.

  • Renegotiating your balance: Negotiating with the creditors to pay off a lower lump sum payment is a good idea, but it can close out a credit card account that is overdue. An online loan of up to $25,000/- with an interest rate of 20-30% less can be obtained from lendingclub.com or prosper.com if you have a good credit score and a job. Use that money to make the lump sum payment towards your negotiated amount with your credit card company. That way you could be free of your high-interest credit card debt.
  • Transfer your balance: Transfer all your balances to the credit card that offers you a lower interest rate and favorable payment plan. In fact, it is highly considered to be a good talking point while negotiating, to offer to transfer all your balances as it may entice the bank to lower your rate. Then be smart and commit to paying off all your credit card debt within the introductory low-interest-rate period. Otherwise, you will be worse off than when you started. The teaser rate usually lasts up to 12 to 18 months.
  • Reducing interest rate: Your chances of being granted a lower interest rate is high if you have been the bank’s customer for years and have consistently paid the bills yet maintained a balance. Leverage yourself as well by making sure that you already have a better interest rate offer from elsewhere. Then call the bank and politely speak to the person who has the power to reduce your interest rate. Often obtaining a low-interest-rate is just a phone call away and can save up to hundreds of dollars annually.
  • Workout arrangement: Under a workout agreement, your credit line will be cut off, but the bank can agree to do a combination of the following – eliminate interest rates, lower the amount, reduce the minimum monthly payment, stop late fees, waive-off the over-limit charges and forgive past penalties. If you have a good track record, make sure you let them know about that, as they will want to keep your business. It is also advisable to let them know if your financial situation has changed for the better.
  • Debt management program: A professional debt counselor can agree to negotiate a favorable repayment arrangement with the bank on your behalf after careful consideration of your financial situation.
  • Forbearance program: If an event in your life puts you out of work temporarily the bank can agree to a Forbearance Program that will give you a brief break from full payment. It is similar to a workout arrangement, and the terms would be agreed on between the debtor and creditor on an ad-hoc basis.
  • Debt settlement program: As a last resort, Debt Settlement Program, through a for-profit debt settlement company, allows you to stop paying your creditors until they are willing to accept a reduced payment. Be aware that you are not required to pay advance fees to the debt settlement company.

Different banks and creditors have different names for the programs mentioned above. So it is prudent to state your pain point or the reason why you would like to speak to a higher authority. After cutting any one of the deals make sure to get the agreement in writing from the creditor or bank. If you are cash-strapped but still do not want to go through the programs, the best bet is to make at least two minimum payments per month in a span of two weeks.

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