Alternatives to Paying Off Credit Card Debt

When you’re saddled with a large amount of credit card debt, it quickly becomes clear that just paying the minimum amount due each month isn’t going to get you very far in cutting into that balance. And it can be disheartening to see the amount you owe creep up as interest continues to accrue each month, despite your regular payments.

What to Do with Excessive Credit Card Debt
There are, however, a couple of different ways you can tackle your credit card debt beyond your traditional monthly payments. With some strategic planning and analysis, you could find a way to save money on interest and pay off your credit card even faster than you could ever have imagined. Ready to learn how?

Take Out a Personal Loan
With interest rates at a near historic low, it’s very possible that you could qualify for a personal loan that has a lower interest rate than your credit card. Consider paying off all of your high interest cards with a loan and then make one regular payment each month. You can typically pick a loan term that is long enough to make your monthly payments work for you; in fact, you might be able to find one up to seven years. And with online lenders increasing, you could very well qualify regardless of your credit history.

There are, however, a few things to take into account with a personal loan:

• Make sure you’re saving money on interest for the full life of the loan.
• Find out if the lender charges origination fees or any other hidden costs to borrow.
• Find out any late payment fees, which can be significant.
• Compare rates to make sure you get the lowest rate available.

Transfer Your Balance (But Be Strategic!)

Transferring your credit card balances to a low-interest credit card can be a smart strategy to save money on interest. Many cards offer enticing 0% introductory APR periods, sometimes lasting up to a year. However, there are a few key things to consider before you jump in:

• The Ticking Clock: These 0% intro periods are temporary. Make sure you have a plan to pay off the transferred balance entirely within that timeframe. Otherwise, you could end up with a higher interest rate than you had before, potentially costing you more in the long run.
• Balance Transfer Fees: Be aware of balance transfer fees, which can range from 3% to 5% of the transferred amount. Factor these fees into your calculations to see if the potential interest savings outweigh the upfront cost.
• APR after the Intro Period: Don’t just focus on the introductory 0% rate. Check the APR that kicks in after the intro period is over. Ideally, it should be lower than your current credit card interest rates.
• The Big Picture: A balance transfer can be a helpful tool, but it’s not a magic bullet. Focus on creating a budget and sticking to a strong repayment plan to truly conquer your credit card debt.

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