How can Consumers Get Out of Credit Card Debt?

Today many consumers with significant outstanding credit card balances may wonder how to fix credit standings and reduce their debts in a relatively short period of time, and there are certainly ways they can do so responsibly.

One tactic that many consumers might find beneficial is paying down their debts the old fashioned way — increasing their monthly payments. New laws state that lenders who receive more than the stated minimum on a consumer’s credit card bill have to apply the extra money directly to the loan principal, meaning the balance is reduced far more quickly and does not face as many interest charges in the future.

However, some consumers may find doing so difficult, and as such, it can be helpful to look into other areas of their finances for inefficiencies. After a careful review of their finances, if they can identify any areas where they’re paying more than they should for products or services every month, they may be able to scale back those contributions and start putting that money toward their outstanding credit card debt. However, it may be unwise to reduce other savings efforts, such as contributions to an emergency fund or retirement plan, in an attempt to pay down credit card balances.

Try a balance transfer card

Consumers who have been able to maintain good credit scores despite their high balances may also be able to find offers for a balance transfer credit card that can be extremely beneficial. That’s because these accounts come with a 0 percent interest rate for some period of time, usually between six months and two years. During this time, consumers will be able to make regular contributions without facing any added interest charges being applied to their balance, but they will need to be diligent about making attempts to pay their debts off in full within that period.

That’s because these accounts, in addition to a typical 3 percent transfer charge, typically come with a higher ongoing interest rate than other credit cards, and therefore can end up being somewhat costly if borrowers haven’t been able to completely pay off their balance. Fortunately, this type of credit help will likely be extremely beneficial in the long-run for all aspects of a borrower’s finances.