I work in the credit industry and there are several ways you can go about tackling this. First off, take comfort in the knowledge that $6k is not a lot to owe, but if you don't pay it the right way, it will become a long term problem.
Step one: contact your credit card companies and request that they lower your interest rate. if you have been a good consumer they will most likely lower the rate... if you have not been paying on time and look like a risk, they will put up a fight... no matter what, do not give up on the idea that you can lower your interest rate...
If you have been on time tell them that you are considering obtaining a different card, and unless they can lower the rate you are simply going to transfer your balance to a new card and cancel the account.
If you have been bad at staying on time with your payments - then its time to get current and stay current. After 6 months of being timely with your payments they will lower your APR.
next step is to develop a repayment plan... if you can out $200 per month toward the debt you should be done in under 3 yrs. I would suggest that you set yourself up to pay your bills on line using an auto bill pay system, most banks offer this service free of charge and it is a quick way to have your payments go out. Its also easy to track and manage. Set yourself up to pay every 2 weeks. ($6k means your monthly minimum is probably $120 - $135) try an set it so that you make this payment every time you get paid... the more money you can spare towards the debt the faster it will be paid off.
In the meantime you will also want to set up a household budget to see how much money is coming in and out of every dollar, how many pennies are being committed to bills. Once you know what you have to work with it will be easier to plan out the upcoming months.
If you have a lot of extra cash that you can put toward the debt, make sure that you also set aside a reasonable amount into your savings account (if you have $150 that you can send to your card - send $130 and put $20 into savings)
The reason that you want to put money in savings is that you will begin to build up solvency - meaning that you won't have to rely on credit should some unexpected expense come up... (new tires, emergency repairs, etc)
Finally, once you have paid off the debts, DO NOT STOP PAYING- only change where you are sending the money... what I mean is, put that $150 into your savings account so that you can start building up a bit of a nest egg. Having accessable cash help to further stabilize your finances. Everyone should have at least 6 months worth of living expenses available to them in their savings account.
This is an emergency fund that will prevent you from going back into debt should you lose your job, have to move or encounter a large expense down the road (want to buy a home, etc)
There are several professional services that can help such as Debt Management and Settlement Companies, but if you are responsible and can handle taking 3 hours a month to look over your situation you don't really need them. Always be proactive with your debts, always look for ways to save. With a little patience, self-control and determination you will be out of debt in no time.
Best of luck to you.
2006-11-29 14:20:02
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answer #1
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answered by E-Rock 3
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Unfortunately, credit card debt is a dead horse. You have already had your fun or picked up your merchandise, and now you must pay for it. The interest is what the bank charges you for the privilege.
The fastest (ethical) way to eliminate the debt is to pay extra on the debt. Pay anything extra that you can afford. Ignore the minimum payment. Pay off the debt before you buy anything new.
If you can, take out a personal loan (or loan against your car or other personal or real property) elsewhere at a lower interest rate and pay off the credit card. You might do this through a credit union if you belong to one. Even if you do get a loan with a lower rate, pay extra on it, too, until you beat that dead horse to death!
On a credit card, your credit card company can increase the rate of interest anytime they want. I know of default rates (the amount a bank or credit card company charges if you miss a payment or are late with a payment) in the 20 and 30 percent rates, or more. Even the regular account rates can be increased on their whims, while you, as the account holder, get caught with a higher payment just to keep up.
On the bright side: As you pay it off, each extra dollar you pay on the debt (dollar toward principal) is a dollar you will never pay interest on again (at least not on that loan). While you are still in debt, the only sure thing is the interest you must pay along with any principal balance.
Tighten your belt and hit it hard!
Good luck with it.
2006-11-29 15:04:43
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answer #2
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answered by brightpool 3
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Okay this is what you have to do.
Put the following on a spreadsheet or handwrite.
1. Each balance of your credit card.
2. The minimum payment due each month.
3. The interest rate due each month on each card.
4. The total cost of credit (due you have a card coming up for renewal that you are charged an annual fee).
Now, you need to have a budget prepared. How much comin in and how much goin out.
If you do not have an extra $100.00 - $200.00 a month then you need to cut back or get a small business second job.
Because the extra is going to go on your lowest balance credit card.
Let's say you have a JC Penny's card with a balance of $437.00 and the interest rate is 18%
Pay off this card with the extra money you have. It may take two months, maybe 4 but once that is done. DONT charge on the card.
Next apply the same extra money to your either your next lowest balanced card or a lower balanced card with a higher interest rate.
For example you have a 10% Kohl's card for $1,600. But you also have a $700.00 card with 21% interest. Pay down the $700 and now you have two cards paid off on time.
You can also refinance your credit cards. What is your credit score. Go to www.msn.com and use the free score analyzer or go to www.myfico.com and pay the fee to see what credit score is. Now you can call up other credit card issuers and tell them you want a better deal. Because the industry is so competitive they will deal with you. Lower from 21% to 14%. If you are paying on time they will do it.
Finally, you can refinance by actually applying for credit. Yes, let's say you have department store cards at 14%-21%. Good credit rating and you have been throwing away pre-approved offers. Well now you look at best one, call credit card company and ask if they will give credit card to transfer balance from higher cards. YES, they will. So maybe you get a 0-9% card for $2,500. You pay off lower priced cards. Now the money you are saving. No interest on new card for at least 6 months, means more money to pay down other cards.
Well I hope this helps.
Good luck
2006-11-29 12:30:54
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answer #3
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answered by teenriodoll 3
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With years experience in the credit business, I will disagree with the other people here and tell you this is not a lot of money to have on a credit card. I have worked with people between $80,000 to $165,000 in non-secured debt.
Depending on how much you earn and your age would dictate a course of action. If you earn enough to start paying it off every month, I would recomment paying as much as you can. At 30% interest rate, your card is accumulating about $150 per month in interest, so you'll need to pay more than this to start putting a dent in it.
If you are younger and have earning years ahead of you, you'll be able to pay more as time goes along. If this is your only credit card, you're not doing as bad as others. However, I can't remember one client who paid off their debt through a refinance or debt consolidation and stop using their credit card. It's a habit you'll need to break when X-mass is just around the corner next year and you've got $1,000 limit you've managed to earn paying the credit card all next year. It will be very tempting to rack the debt back up.
One of the hardest things to do is to cut up the card, because you think it is "in case of an emergency". It's really not, and cutting it up will force you to start saving your money in case of that emergency instead of relying on the credit.
If your real, unsecured debt is over $15,000 and you earn less than $40,000 per year, I would recommend talking to a bankruptcy attorney. The laws have changed, but a fresh start isn't such a bad thing for some people.
Best of luck.
2006-11-29 13:26:40
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answer #4
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answered by Anonymous
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You didn't mention if you have one card or more than one card. If you have more than one card, start with the one with the highest interest rate. Pay as much as you can to that card without neglecting the others. Once it is paid off, move on to the next highest card. If you only have one card to contend with then be sure to pay as much to it as you can. The more you can pay over the minimum payment will help you. It will be hard at first but once you can see the numbers dropping, it won't be hard to continue. Then once you have it (or them) paid off, you can start putting that amount in savings instead. I personally decided that I wanted my card to be paid off in a year. So I just divided the amount owed by 12 and tacked $30 more onto that amount. My minimum payment is something like $78 but I am sending $160 each month. Provided I get to keep my job in this economy, I will have it paid off in January.
2016-03-29 16:27:00
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answer #5
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answered by ? 4
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If your credit score has been damaged by late payments, identity theft, or inaccurate information such as old collections showing as owed when they have been paid, you could have difficulty qualifying for a mortgage loan, or end up with very high mortgage interest rates. Sometimes you can raise your score substantially by disputing incorrect information. When it comes to personal credit restoration, you really have two options. You can repair negative report on your own, and you are not required to hire professional services. But choosing the latter option can give you certain leverage.
2014-11-22 17:26:59
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answer #6
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answered by Anonymous
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Instead of making the minimum payments monthly, put every spare cent you have into paying it off. 6Gs is a lot on a credit card. Another route you can take is taking out a 6G loan from your bank at an obviously MUCH lower interest rate. That will help you save money there.
2006-11-29 12:12:49
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answer #7
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answered by Anonymous
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1. Win the lottery.
2. Marry Bill Gates child.
3. learn to hit a little white ball going 100 mph a very far way.
2006-11-29 12:23:13
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answer #8
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answered by e e 1
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no it's not hard to get rid of it in BK but 6k is too high i would suggest a refi on your home mortgage if you don't have one then consult with a credit cosunler.
2006-11-29 12:13:24
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answer #9
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answered by Anonymous
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pay it off
good luck if you even think of disharging in BK court, it's a lot tougher to skip out on the debt.
2006-11-29 12:11:39
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answer #10
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answered by Anonymous
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