How can you pay off your credit card debts?

Wed, Jun 16, 2010

Financial Advice

Are you unable to make timely payments towards your credit cards? Do you wish to get rid of them? If yes, you must immediately prepare a budget for yourself and determine ways by which you can save some amount each month to repay your bills. If your financial situation does not permit you to repay your outstanding debt balances in full, you can try to negotiate credit card debt reduction with your card issuer.

Tips to help you negotiate a credit card debt reduction

Some of the tips that will help you successfully negotiate credit card debt reduction are:

Determine your affordability: When you want to negotiate with your creditors, you must first determine how much you can afford to make as monthly payments towards each of your bills.

Explain your financial situation: You should explain your financial situation to your creditors and inform them about the hardship you are facing.

Request a lower interest rate: If you feel that you can manage your card payments if they become a little less, you must request the card issuers to lower the interest rates on your cards.

Ask for a forbearance plan: If you are facing a temporary hardship as you have lost your job or for any other reason, you can ask the card company for a forbearance plan. Under this plan, you will not have to make any payments for a certain period of time, that generally varies from 6 months to 1 year. During this time period, the interest will accrue at a lower rate.

Negotiate a settlement: If you have a very high-interest credit card and have accumulated a large amount of debt on it, you can also negotiate a settlement with your creditor. For this, you have to convince the card issuer that you are not in a position to repay the outstanding balance in full.

When you negotiate a credit card debt reduction, you must keep in mind that it will lower your credit score. It gets listed in your credit report as “paid as settled” or “paid as agreed”. So, while you negotiate, you must also request your creditors to report your account as “paid in full”.

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