Before I go into detail about the options available to you, let me make one important point. Don’t delay or miss minimum payments while you plan for your strategy. This will reduce your credit score, and it can also eliminate the best options.
Here are four ways you can do it now.
1. Transfer your balance.
In 2020, it was rare to find zero-rate balance transfer offers for cards, but they are becoming more common, according to Sara Rathner (credit card expert at NerdWallet). The cards can charge as much as 5% upfront, so make sure you have a long enough introductory offer to reduce your balance. Instead, I discovered that the Visa Platinum Card from the US bank offered the most extended period of interest-free credit – 20 months. Citi Double Cash cards are offered 18 months interest-free.
2. Ask for a break.
COVID has allowed card issuers to be more flexible. LendingTree reports that 83% of those who requested a rate reduction have received it since the beginning of 2020. Bruce McClary of the National Foundation for Credit Counseling (NFCC) said that many issuers offer special programs for cardholders in financial trouble. He advises you to inform your lender about the impact of coronavirus on your finances. It would help if you told them that you plan to keep your payments up and reduce your balances. However, he suggests that you negotiate for more affordable terms. He suggests that your issuer might lower the interest rate for six- to nine months.
3. Refinance using a personal loan
Ask your bank or credit union if they can consolidate all your card debt into a lower interest loan. According to the Federal Reserve, the average rate for a two-year personal loan was less than 10% as of the end of 2020. This could be a better deal than the one you get from your bank. Do not borrow against your car or house to pay your card. This could lead to you losing your property. Don’t take out “debt consolidation loans” from companies that you have never heard of. There’s a good chance they will try to rip you off or charge you additional fees.
4. Make a fitness plan.
The final solution is to set up a repayment plan with a non-profit credit counseling agency. You can find them on NFCC.org. An advisor will review your income and assess your debt to determine the best option. Next, the advisor will work with your lenders to negotiate a payment plan. This will reduce your monthly payments, your interest rate and maybe even eliminate some debt. You are not in any worse position if you reject the plan. Accept the plan, and you will begin making monthly payments to the advisory service. This will, in turn, pay the issuers. The plan will require you to pay a small amount, and you can forgo any credit cards. Over time, however, you’ll be able to pay off your debts. You will also be able to get rid of all the worries and burdens that come with debt.