Well after a long, protracted battle I have finally rid myself of all credit card debt (minus $4 and some change in finance charges). I was smart this time around and closed the accounts as I paid them off. I decided to keep the one with the lowest interest rate open for now since I’ve had trouble renting cars with debit cards in the past.
One site that was infinitely helpful with this adventure was www.fool.com. Their newsletter on credit debt was stuffed full of helpful hints and advice from others who were in much worse situations that I was. Here are a few tips that helped me out quite a bit.
- Cut up the cards with the highest interest rates to help avoid the temptation to use those cards.
- Many credit card companies offer extremely low introductory rates on balance transfers. Those same companies will approve just about anyone who is willing to transfer money over when they open the credit card. The idea is to transfer your 20%+ cards onto 0% introductory rates and pay them off before the rates go up (usually 6 months to a year).
- Leave your credit cards at home when you go shopping.
- Many companies will offer you lower interest rates if you call up threatening to pay off your account and close out your card. Worst case scenario you are out the few minutes it takes to make the call.
- Pay more than the minimum each month! Most often the minimum is merely the monthly finance charge and a few bucks towards the principle.
- Close the accounts as you pay them off!
I hope that these tips help others get out of debt as well. I must say it feels damn good to not owe any money to credit cards anymore. I’ve lowered my monthly bills by over $100 (almost my car payment!). The odd thing about this is that I’ve probably actually *lowered* my credit rating. How is that possible you ask? Well most credit agencies look at how much credit is available to you as part of their decision to give you credit. For instance, bank A would be more apt to loan you money if you have a $10k credit line with no balance than a $3k credit line with no balance, which makes sense for the most part (the idea being that if you have $10k available to you that you earned it somewhere along the line).