How to Lower Credit Card Payments |
By Arthur McCall on March 17, 2010
.jpg.aspx?width=75&height=75) In order to lower credit card payments, you must first determine where you stand on your payments. Have you made all of your recent payments in a timely manner? Have you paid more than the minimum on your last few payments? These are looked upon as indicators of a strong financial foothold by the credit card companies, and they will make it much easier for you to lower your minimum payments.
Arguably the easiest method of lowering your credit card rates if you have a strong financial foothold is by lowering your interest rate. The credit card companies charge you whatever is owed in interest on your payments, plus a minimum payment, so if the APR (Annual Percentage Rate) is cut in half, the payments on interest on the monthly basis will be cut in half also. Often simply asking the credit card company to lower your rate will work if you have shown financial strength recently. If this does not work, you can ask to have your balance transferred to another card with a lower interest rate. This, however, may incur a fee, and often the lower rate is a “teaser rate” that will soon escalate to the same, or higher rate as the company you transferred from, so be aware of a rate change clause in the contract.
If lowering your credit card rates isn’t successful, a debt management plan might be your best bet. With debt management, a company will assess all of your outstanding debt and interest rates, then negotiate a lower rate with these companies. By working with the companies to whom you owe debt, debt management companies often manage to reduce the interest rate, and they make it easier for you to pay because you make one payment to them which is parceled out to the credit companies.
A similar option would be a debt consolidation loan, which would be a loan taken out to pay your credit card debt immediately, thereby consolidating your debt to a single company. This type of loan is a form of exchanging open ended, “revolving debt” for “fixed payment, time certain debt”. If these options aren’t available to you, you could get a home equity loan. This option requires that you pledge the equity of your home up for collateral, which is risky if there is a chance that you will not be able to pay off the amount owed.
In closing, it is important to remember that credit card debt is often the most expensive form of debt, and should be used for temporary financing only.
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