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Debt Guide: Credit Card Payoff Options

Credit Card Companies Strategy: Keep the Consumer in Debt

Credit Card Reduction Options:
Option 1: pay down your card debt one at a time
Option 2: transfer your card balances to one card
Option 3: consolidate card debt into one low repayment plan
Option 4: seek debt counseling help to avoid loan default
  apply for a debt consolidation loan
  or get professional help designing your payoff plan
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Option #1: Pay Down One Card at a Time
Use this option if you have minimal credit card debt that can be paid off in 6-18 months
  • Is this the right option for you:
    this may be an ideal option if your total credit card debt is minimal and if you can budget enough disposal income to payoff your credit cards within 6-18 months.

    This option will give you the best credit rating protection.


  • Start by listing your cards:
    open calc window and list each credit card that has a debt balance. Insert the balance amount with its respective interest rate (APR). Hit "Calculate" to total your numbers.

    Note the card that is charging the highest interest rate — this is the credit card balance that you will pay off first.


  • Estimate your repayment schedule:
    open calc window to schedule an allocated amount each month that can pay down your selected high interest-rate credit card.

    Include in your budget plan the amount you will need to make minimum payments on all other cards.

    We have a section on budget and spending plans


  • Reduce your monthly expenses:
    as you pay down your credit card, review our section on lowering your monthly bills in housing, transporation, living, recreation, and more.

    Click to view "lowering your bills"

    Your monthly cost savings can be used to pay down your credit card faster.


  • Continue payoff:
    once you pay down your high interest-rate credit card, find the next highest interest-rate card and schedule a new repayment plan.

    Repeat these steps for each card — paying down the highest interest-rate card first, and on down to the lowest interest-rate card.


  • Important note:
    be sure to review Step 5 on credit card management techniques — you want to avoid getting yourself back in debt with your credit cards.

Option #2: Combine All Card Balances Under One Card
Use this option to if you can payoff your credit card debt with 12-36 months
  • Is this the right option for you:
    this may be an ideal option if you have significant credit card debt that can be paid off within a short period (12-36 months) and if you maintain a good-to-better credit rating

    for information about your credit rating: visit our affiliated site at SayPlanning.com


  • Find transfer balance programs:
    if you have a good credit rating, card issuers will solicit you with attractive credit card consolidation (transfer balance) programs.

    You may also contact your current credit card issuer about transferring and consolidating other credit card debt.

    Inform them that you are shopping to consolidate all or part of your credit card debt under one card — if your credit rating is good, they will want to keep you as a customer.

    Find the transfer program that offers a super low interest rate at transfer terms of 6 or more months. Anything less than 6 months is not worth the trouble. Also avoid programs that charge a transfer fee. The fee will wipe away your low-interest savings.

    Link to our credit card listing for debt transfer programs

    Make sure you read the fine print.


  • List your cards:
    open calc window and list each credit card that has a debt balance. Insert the balance amount with its respective interest rate (APR). Hit "Calculate" to total your numbers.


  • Payoff your cards:
    take the transfer program that offers the best terms — lowest rate, longest term, and zero transfer fees. Use the program's transfer checks to payoff those credit cards listed in calc window that have the highest interest rate charges.

    If your total credit card debt exceeds the transfer program's credit limit, you may need to use a second or third balance transfer program.


  • Schedule your pay down amount:
    open calc window to schedule a payoff amount that significantly reduces your consolidated amount during the transfer period.


  • Maintain terms:
    since most transfer programs offer card consolidation terms of 6-12 or more months — significantly lesser time than what you may need to payoff your card debt — you may need to play the transfer game when one program ends and another begins.

    Keep note of other transfer balance offers that come in the mail — hold on to those offers that carry attractive terms.

    Be careful not to jump to another transfer program within short periods. Every time you sign up for a transfer program, an inquiry is made to your credit report. You want to limit credit inquiries to "one" inquiry every "six or more" months.

    See our discussion on maintaining a good credit rating at our parent site SayPlanning.com


  • Payoff amount:
    if your budgeted monthly payment does not payoff your credit card debt with 12-24 months, you may need to consider a debt consolidation program under Option 3 below.


  • Try to lower your other living costs:
    as you pay down your credit card, review our section on lowering your monthly bills in housing, transporation, living, recreation, and more. Your monthly cost savings can be used to pay down your credit card debt faster.

    Click to view "lowering your bills"


  • Important note:
    tuck the credit card that has your transfer balance away. Do not use the credit card for any credit card purchases. You want to avoid interest being charged on everyday purchases. Use a different credit card for purchases so that you can take avantage of the 25-day grace period.

    Be sure to review Step 5 on credit card management techniques — you want to avoid getting yourself back in debt.

Option #3: Consolidate Your Credit Card Debt
Use this option if you have significant credit card debt that will take more than 3 years to payoff
  • Is this the right option for you:
    this may be an ideal option if your total credit card debt is significant and if you need a consolidation program with payoff terms of 3 years or more.

    This option is ideal for those who need to consolidate credit card debt with other loan debt.

    By consolidating your debt under repayment terms of 3 or more years, you basically lower your monthly payment by extending your repayment period.


  • Calculate amount to consolidate:
    link to our Debt Consolidation Worksheet and list each credit card that has a debt balance. Insert the balance amount with its respective interest rate (APR). Hit "Calculate" to total your numbers.


  • Set repayment plan:
    use the debt consolidation worksheet to calculate your monthly payment

    Note that your payoff term will be anywhere from 5- to 7-to 10-years or more.

    Calculate your estimated monthly payment; note the monthly savings you can anticipate by consolidating your debt under extended repayment terms.

    Run different repayment scenarios to design a payoff plan that works for your.


  • Loan Consolidation Options:
  • 1) If You Own a Home:
    by using the security of your home, you can secure a home equity or home refinancing loan at low rates with repayment terms of 5 or more years. You can use this loan to consolidate your credit card and other loan debt.

    This option allows you to setup a repayment plan with extended terms that can significantly reduce your monthly payment (depending on the amount being consolidated).

    You can also pay extra each month to quickly payoff your consolidation loan.

    Get up to four national lenders to review a consolidation option that fits your budget. Select the option that works for you. No obligation.

    no obligation debt consolidation loan form


    2) For those who don't own a home:
    this deb reduction option is available for debt holders who don't have a home or who don't have enough equity in their home to consolidate. Debt professionals will tailor a debt reduction plan that works for you.

    This option allows you to setup a repayment plan with extended terms that can significantly reduce your monthly payment (depending on the amount being consolidated).

    no obligation debt reduction request form


  • Lower your monthly costs:
    as you pay down your consolidation loan, lower your monthly bills in housing, transporation, living, recreation, and more.

    Click to view "lowering your bills"

    Your monthly cost savings can be used to pay down your debt faster.

Option #4: Seek Debt Counseling Services

Use this option if you are unable to payoff your credit card debt
  • Is this the right option for you:
    use this option if you find yourself unable to repay your current debt balances and want to avoid bankruptcy.

    This may be the right option if circumstances such as unemployment, loss of income, or other unfortunate event prevents you from repaying your debts.

    This option is also recommended if you have collection agencies threathening action. Counseling services can advise and protect you from adverse action.


  • Credit counseling services:
    credit counselors will be able to discuss your situation with your debt lenders to either forgive part of the debt or structure a repayment plan that fits your budget.

    They will also work with you to establish a monthly repayment plan that fits your budget.


  • How the program works:
    you first complete an enrollment form that authorizes the credit counselor to discuss your situation.

    click here to start that from our national list of debt counseling professionals

    the credit counselor will contact your creditors to negotiate a repayment plan that is significantly less than you currently pay — why? creditors will welcome partial payment rather than no payment.

    credit counselors will then setup a monthly repayment plan that works for you

    you will then make your monthly payments to the credit counselor who in turns divides the payment among the creditors based on the negotiated repayment amount

    in most cases, creditors will inactivate your credit cards to avoid charging additional debt.

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