How to Get Out of Credit Card Debt

Overview

Getting rid of credit-card debt is easier said than done. And unless you come up with a realistic plan, the debt may never disappear. But fortunately, there are several ways to get out of credit-card debt. Do you own a home? If so, several options are available to you. And if you don't own a home, you can likely take advantage of other provisions designed to help people get rid of unwanted (and unnecessary) debts.

Step 1

Ask for a lower credit-card rate. Paying a high interest rate on your credit cards can make debt elimination difficult. Gather your credit-card statements and review the interest rates. Next, contact your lender and request a reduced rate. When you obtain a lower interest rate, your minimum monthly payment drops. In turn, you can double or triple your minimum payments, and more of your payment goes toward reducing the principal.

Step 2

Apply for a home equity loan. If you can't pay off your credit-card debts on your own, consider a home equity loan or line of credit. This provision lets you tap into your equity. Use the borrowed money to pay off credit cards, student loans, car loans and other installment loans. And because home equity loans feature low interest rates and fixed terms, you can be debt-free in a few years.

Step 3

Refinance your mortgage loan. If you have substantial equity and want to take advantage of falling interest rates, apply for a mortgage refinance and take a cash-out option. With a cash-out refinance, you'll borrow money from your equity and use the funds to pay off your debts. Lenders include the borrowed money into the new loan, which increases your home-loan balance.

Step 4

Get a debt-consolidation loan. Individuals with an excellent credit history can apply for a debt-consolidation loan and combine all of their debts into one. If you have bad credit, consider a secured debt-consolidation loan. You'll need to provide collateral, such as a vehicle or boat title.

Step 5

Use a debt-consolidation agency. Some people need help to get out of credit-card debt. Contact a debt-consolidation agency and get assistance. They'll manage your credit accounts, negotiate better rates and devise a new payment plan. Stick with their plan, and you can pay off your credit cards in 5 to 7 years.

How to Get Out of Credit Card Debt by creditdebtconsolidating.com