what's the best way to pay off credit card debt?

Question

the accounts are closed. we don't use any credit cards any more at all. most of the cards are now 3-4 months past due because we just couldn't pay them, which means that most of them are now in collections. some collections companies are even willing to take pennies on the dollar, but if we don't have the money to pay the bills, what now?

Answer 1

If you have more than one, here is a technique many financial advisors use:
Organize your debt into a list smallest to greatest (pay no attention to the APR.)
Make the minimum monthly payments on all cards except the one with the smallest amount of debt. Every extra cent that you can spare should go towards the monthly payment of that one card. Say the minimum payment is $20/mo, but you manage to come up with $40/mo.
Once that card gets paid off, apply the $40 you were paying plus the minimum balance of the next card on your list. (If the min on the 2nd card is $10, you will be paying $50/mo to this card.
Once that card gets paid off, move onto the next.

Many people use this technique, but I learned it from Dave Ramsey--he has books out on it. So far, it's been working for me---4 paid off already!

Oh yah---and you have to have some money put away in a savings account for emergencies (car breaks down, need to leave town, medical emergency, etc.) Also, you can't use the cards anymore.

Answer 2

Contact the credit card people and negotiate a lower interest rate. They would rather lower the interest rate than have you transfer the balance to another card. Then try to make the biggest payment you can each month. Only paying the minimum pays very little of the actual principal and that interest just keep adding up. Also, cut up the cards and get rid of them. Having them around is only a temptation to continue using them. Once you are out of debt, pay cash or do without!!!!

Answer 3

The first and maybe hardest step is deciding that it's important enough to do that you're willing to give up something (a night out, new shoes, etc.) in order to have enough money to pay off the debt. You have to spend less than you earn in order to pay off debt.

Once you have some extra money, I would use it to pay off the card with the highest interest rate first. (But make sure you pay at least the minimum on every card. Paying less than the minimum usually results in extra charges and can hurt your credit rating.) After you get the highest rate card paid off, work on the next highest. Once you get them all paid off, be sure to pay the full amount due on every card every month and resolve to never ever get in credit card debt again. It's VERY expensive.

Good luck. If you set your mind to it, you can do it.

Answer 4

The easiest method of determining you exact status of your credit card debt and your monthly repayment is to compute your monthly income and then calculate the maximum you can pay into your credit card account. Then divide your earnings by your monthly credit card payments. If you find that at least 15% of your earnings are used to pay your credit card debt each month, then your chances of getting trapped by huge credit card debt are high. Besides this debt cannot be eliminated easily.

If you are in the unenviable condition, the best solution is not to use your credit cards and trim your expenses from other areas. This idea may be alien to many, but it is the beginning of the path of saving plenty of money. One of the areas where you can save money is your grocery expenses. Though we all need food to live and some amount of expenses in this area is inevitable, the way in which we spend money on food items, can reduce our monthly bills drastically.

Answer 5

The best way to pay off unsecured debt on your credit card is to join a debt settlement company.

They will negotiate with your creditors and reduce your principal debt amount by around 30% to 70% depending on your credit cards. The debt settlement companies will allow you to make minimum monthly payments which are affordable to you.So, you will be debt free within 36 years depending on how much you can pay as monthly payment.

coantct this debt settlement company. They were very helpful to me in the same situation couple of years back.

http://www.debtfreeafterall.com

Good Luck

Answer 6

Not to be smart, but step one is to stop using the cards. Commit yourself to a one year spending freeze. Tell your family and friends that things are gonna be tight for a little while and that you will be renting movies and eating in until further notice. Set up a monthly budget and pay off as much as you can every month.

Also, call your credit card companies to see if you are eligible for any rate reductions. If your credit history is good and you haven't had any late payments, sometimes you can get your interest rate lowered. That will help speed up the process.

Answer 7

Call the customer service number on your credit card and tell them that you want to pay off the card but you do not have enough money to pay it off in full. Negotiate a smaller payoff. Most cards are willing to do this.

Answer 8

youre in a bind. the easiest way to pay off your cards is to open another BEFORE they close the others and then use that new one to pay the old ones....

only thing u can do now since you cant get another card is to either call and ask them to close the card and reduce your interest rate if you promise to pay on time ..... or just get a loan somewhere else before your credit gets worse so your debt is consolidated.

Answer 9

Start by paying off credit cards with higher interest rates first. Always pay more than the minimum amount.

Answer 10

Always pay more than the minimum payment. Minimum payments will keep you in debt forever.

Don't charge any more on it.

Make payment on time.

But the only way to reduce the debt is to pay as much as you can on it every month. If you make only the minimum payment, you're barely touching the principal. Most of what you're paying is going to interest and they just keep adding more on.