Being in debt is not fun. Unfortunately, many people do find themselves in debt and carry balances on multiple credit cards. This article will show you how to eliminate credit card debt on your own without using a debt consolidation service. Personally, I think these debt consolidation companies could be helpful to some, but for the most part, they are charging you money for something that you could do on your own.
Gather all of your credit cards and make a list. On the list write down the name of the card, what you owe, the current interest rate, and the phone number for each card. Here’s a sample debt reduction spreadsheet that you can use.
Note: In the illustration, the 1st number is the balance, 2nd number is the credit limit, and 3rd number is the interest rate
Call each company and ask for a lower interest rate; also check what they can offer you as far as balance transfer goes. If the first customer service representative is not helpful, either (1) ask to speak with a supervisor, or (2) hang up and call again. There are good reps and bad reps, you don’t want to waste time with the bad ones.
If a company gives you a better offer, feel free to share that information with the others — it might motivate them to be more generous.
Note: This step might be harder now that we are in an economic recession
In our example, card A gave us the magical “no fee 0% APR” transfer*, card B and C gave us a courtesy interest rate reduction, and card D won’t budge.
* As pointed out below, you’ll probably have to pay off a card before it will offer you a 0% balance transfer, so your other option is too apply for a new card then do the transfer.
Update your list with the new interest rates, and sort them in order from highest to the lowest interest rate.
This is the quickest way to save money, transfer balances from high interest cards to the lowest interest card(s)*. For example:
* Assuming there is no transfer fee. If there’s a fee, you will have to do some calculation.
Also, take a look at this article: Should You Transfer Your Credit Card Balance?
There are also a few things you can try:
Pay the minimum balance on card C and A, and concentrate on paying the most you can on card B. Let’s assume you pay:
If a card offers “no payment” grace period, then don’t pay anything and use that money to pay the highest interest rate card. However, you have to be careful and keep track of when the first payment becomes due — many card with no payment period retroactively charge you interest for the entire period (i.e., from day 1).
Once card B is paid off, snowball that monthly payment to card C. For instance:
Once the card is paid off, snowball that monthly payment to the next card — so you’ll be paying $140 per month on card A.
If you still need help to create your debt repayment plan, there is a free tool from Ready for Zero that will help create a customized plan similar to the one above for you.