What is the best way to pay off my credit card debt?

Question

I have less than $5,000 in credit card debt, but it kind of has me in a bind.  It seems I'm only paying off the interest while the actual balance never goes down.  I applied online for a personal loan, but was rejected.  I was thinking of maybe using a credit consolidation service to help me out.  What ones are reputable?  Which ones have you personally used and what were your thoughts on them?   Any help is greatly appreciated.

Answer 1

go to cnnmoney.com.  There is a place on there for getting out of debt.  You enter all your credit card dollar amounts and interest rates and it shows you the best way to get out of debt.

Answer 2

You would be far better off to put yourself on a strict budget until you've paid the cards off. If you use a service you'll ding your credit rating, which could cost you thousands later on; especially if you want a mortgage. Don't look for a quick way out.

Answer 3

I experienced a similar problem last year but I wrote to my credit card company, saying that the interest payments are always higher than the minimum payment, hence if I continue to make the minimum payment only then my balance will increase instead of decreasing. I was actually very disappointed with the company and demanded an explanation. Eventually they reduced the interest rate for a period of time.

The other thing you could do is apply for a balance transfer to another credit card, that way you'll get promotional interest rates from the new company and hopefully be able to reduce the balance.

Good luck either way.

Answer 4

I did a balance transfer to a new card (almost exactly $5,000) that has no interest for the first 12 months. I'm planning to pay it down over 2 years (about $206/month) and may switch to another interest free card next year if possible. Otherwise, my new card is a fixed 8.99% interest rate, which is still lower than my other card was anyway.