Hi, I’ve been looking into different ways to pay off my credit card debt. I’m not sure whether a credit card transfer or a debt relief program is the best option. What do you all think? Appreciate any help…
Thanks a lot…
How much do you owe? What are the interest rates and how many cards are we talking about? Giving more details will help people give you better advice.
Jessie said:
How much do you owe? What are the interest rates and how many cards are we talking about? Giving more details will help people give you better advice.
What’s your monthly income like? And what are your basic expenses (rent, utilities, food, etc.)? How much are your debt balances and what’s the interest rate on each? If you have a car loan or student loans, it’s important to know those details too. Write down your full budget to see how much money you can put towards your debt.
Bankruptcy should be your last resort—it’ll hurt your credit for a long time and may make it hard to get a job. Take care, and good luck.
It really depends on what the options are offering in terms of consolidation and interest rates. You didn’t mention what the debt relief options are promising.
Here are four options to think about:
- Debt consolidation loan
- 0% balance transfer
- Credit counseling
- Debt settlement
With 1 & 2, you’ll likely pay a fee of about 5% of your balance for the loan or transfer. Credit counseling can lower your rates to under 9% and may also reduce your monthly payments, but they have fees too. Debt settlement is for those who are really struggling to keep up with payments, and the fees are around 20% of your balance.
For options 3 & 4, you won’t be able to use your cards anymore.
I strongly advise against debt relief programs. If you’re even considering that, just file for bankruptcy. These programs can make you fall behind on payments, and creditors may not even listen to them. Bankruptcy can protect you from lawsuits and judgments, while debt relief offers nothing.
@Sky
Reputable debt management companies don’t make you fall behind. They help with managing multiple creditors and can make things easier, especially if you have a lot of debt. They won’t do anything you can’t do yourself, but having a third party can help.
The first step is figuring out how much debt you have and what interest rates you’re paying on each one. That’ll help you figure out the best plan.
If the debt is large, Chapter 7 bankruptcy might be the way to go.
I transferred a lot of debt into balance transfer accounts. Usually, the limit is around $7-8k, and you have a year to pay it off without interest. I’d suggest moving your highest interest debt to a 0% account and paying it off as fast as possible.
But it depends on:
- How much debt you have
- Your household income
Without knowing those, I’m not sure how helpful this is. Just so you know, if you have student loans, Chapter 7 won’t get rid of them—they stay with you until paid off.
If you want to pay it off in five years, try not to pay the cards until they’re 61 days late. Then call and try to negotiate a payment plan with a low interest rate. If that doesn’t work, wait until they’re 91 days late and try to settle for 35-40%. You’ll need that money in your bank, though. Bankruptcy could also be a good option.
Have you considered a non-profit debt management company? They can help with your credit cards and may even help you figure out a budget. They’ll negotiate with credit card companies to lower your interest rates for a monthly fee and a one-time setup fee.
You could look at organizations like the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).
But be careful—some companies may seem reputable at first, but later turn out to be scams. Always check for reviews, and make sure they are approved by the NFCC or FCAA.