If you’re overwhelmed with credit card debt, filing for bankruptcy isn’t the only option you have. You may be able to manage your debt without having to take that route. Before doing so, consult with an Orlando, Florida, bankruptcy lawyer to see if bankruptcy is a more favorable option or if paying off any debt before filing will hurt your case. Once you’re sure you can handle credit card debt management, try these three ways to simplify payments and reduce interest.
1. Combine your cards into one account
Make paying off debt easier by only having to worry about one account. Transfer your balances to the card with the lowest interest rate. Another option is to take advantage of a balance transfer offer for a new credit card with a 0 percent promotional interest rate and no transfer fee. However, this is only a good choice if you meet the following requirements:
- Your credit score is above 680.
- Your debt is under $10,000 or your debt burden is below 40 percent.
- You won’t be applying for a loan anytime soon.
- You can’t pay off your debt within six months.
- You can make payments on time.
- You have the discipline not to make more purchases with the new card.
If you aren’t sure if a balance transfer is right for you, consult with an attorney with experience in credit card debt.
2. Pay the highest interest rate first
If combining cards isn’t an option, then use the avalanche method. The plan entails paying off the card with the highest interest rate first, then the next highest and so on. Continue to make minimum payments on all cards, but increase the payment as much as you can afford to for the high-rate account. This greatly reduces the amount of interest you’ll have to pay, which is the biggest hurdle in getting out of debt.
3. Negotiate a better interest rate
Bringing down your interest rates is the most beneficial thing you can do. If you can’t do a balance transfer to get 0 percent, then call the credit card company to negotiate a better rate. Companies want to receive the money you owe them, so they’re likely to cooperate if it means you’ll be able to make payments. Even a one or two percentage decrease makes a difference in the long run.
Getting out of debt is possible with the right approach. Remember the second half of the equation, too: staying out of debt. Make smart choices to rebuild your credit and avoid getting into debt again. Contact an experienced attorney to help you get started.