Question: How Can I Lower My Credit Card Debt?

"I have two credit cards and three department store cards that I've just about maxed-out. I can keep up with the monthly payments, but don't have much left over to pay down the balances. I don't want to do anything too drastic that might damage my credit report - what is the best way for me to lower my credit card debt?"

Because you're dealing with department store credit, your biggest problem is likely the excessive interest charges on the balances you've accrued. Charging rates as high as 30%, store credit cards can be a consumers worst nightmare.

Assuming you've ruled out debt settlement as an option because of the credit concerns, the only real remedy is to get your debt carried at lower interest rates. Fortunately, it sounds as if you have kept up to date with your payments and have maintained good credit, so there are a few ways to go about it.

  • Consolidate your credit card debt.
    A debt consolidation loan would allow you to turn those 18% to 30% interest rates into one loan at a much more reasonable rate. Your credit score and other factors will determine the exact figures lenders will offer, but expect close to the 10-12% interest range, lower still if you have security such as a home to use as collateral.
  • Call them up and ask for a lower interest rate.
    Yes, you really can just call up your credit card company and ask for them to lower your interest rate. That doesn't mean they'll do it necessarily, but if you're carrying a large balance at a large interest rate, it's not uncommon for them to knock off a few percentage points.

    If your creditors aren't co-operating, don't be afraid to mention you're in the process of paying off your credit cards debts and are getting rid of the worst-interest offenders first; they'd rather have you paying some interest than none.

  • Balance transfers.
    If you don't have a huge amount of credit card debt, but what you do have is at high interest rates, you might consider finding a new card that offers "balance transfers" at a good interest rate. Just be sure to read the fine print and check the regular rates as well, most balance transfers will offer the lower rate for only a set amount of time.

Getting your interest rates reduced by even a few percentage points annually can save you a lot of money, allowing you to use the savings to pay down your balances and lower your credit card debt faster.

See How Much You Can Save:

Having a hard time keeping up with high interest credit card bills or other debts?

Use the following form to provide some information on your finances to find out how much you could be saving on your bills with debt management solutions.

Select the total amount from the options below.
Be sure to include both "regular" credit cards and any other retail/department store cards as well.
Are you current on all your bill payments for those credit cards? If not - how behind are you?