Due to the troubled economy, more and more people are looking for ways to get out of credit card debt for good. The debt load you carry comes at an enormous price: not only will you pay interest on everything that you borrow, but you could be subject to ridiculous fees and hidden charges. As people have discovered during the credit crunch, having a clean credit report doesn’t always save you from paying too much, either. The only real solution is to say goodbye to credit card debt forever.
There are several ways to get rid of your credit card debt. Each comes with its own pros and cons.
- Liquidate your assets to pay off what you owe. This could mean selling off real estate, boats, recreational vehicles, and high-end consumer electronics, or it could be as simple as having a garage sale. Depending on how much you owe, it might be a great idea to do this. If you’re considering selling real estate or other investments, though, be sure to talk with your financial advisor before doing anything this rash.
- Leverage the equity in your home. Since home equity loans have much lower interest rates, it can be financially prudent to convert high interest credit card debt to a low interest installment loan. Be careful with this method, though. If you miss a payment, you could end up losing your house. Always consider how much you can afford, and don’t put your home at risk unless your very certain you can repay the loan.
- Take out a personal loan. If your credit is good, you may qualify for a low interest personal loan that you can use to pay off your credit cards. You won’t have to put up any collateral, and you could save a lot of money on interest. Be aware that your credit score will take an initial hit, though. Keeping your credit card accounts open for a while will help with this.
- Contact a credit counseling service. Be wary of for-profit debt consolidation companies that tell you to stop making monthly payments, as this will hurt your credit score and could cost you dearly in fees. Instead, seek out a not-for-profit credit counseling or debt management service that will help you make one low, monthly payment you can afford.
- Use balance transfer credit cards. These cards offer low introductory rates and will let you transfer a balance from an existing card for a low fee.
When you get those credit cards paid off, you’ll feel great – but remember, keeping one or two cards open will not only help your credit score, it will give you comfort and confidence if an emergency should arise. No matter which method you choose, or even if you use a combination of the ones we’ve listed above, be sure to check with your accountant or financial advisor when making major financial decisions and protect your income and assets from collections, court proceedings, and bankruptcy.
