One of the first money management steps I took when I reached financial armageddon was to take on my credit cards. I was paying hundreds of dollars each month in finance charges and it had to stop or else I would never get out of debt. I didn’t really want to go to a credit counseling service either because I knew that these services often damage your credit because of the heavy-handed approach they use with your creditors.
Instead, I spent about half a day reworking my finance charges and I ended up reducing them by about 80%. After that, I just started making larger-than-usual payments and soon the amount that I owed shriveled up and blew away.
Here’s how I took on the credit cards by myself – and won.
The Balance Transfer Alternative
Apply for a new card with a great balance transfer offer. I applied for one card that was able to support the outstanding balance of two of the cards with an introductory 0% APR on balance transfers. Basically, this just eliminated the finance charges on two of my cards. If your credit is still strong, you can likely eliminate all (or nearly all) of your finance charges just by doing this.
Call the number on the back of each remaining card and ask to talk to a supervisor. Tell this supervisor that the finance charges are just too much for you and you’re considering a balance transfer. Ask them to reduce your interest rate. Quite often (and especially if your credit is still solid), the supervisor will drop your interest rate to keep you rather than facing the loss of a customer. It’s really important to request a supervisor, though, because often the person you first reach on the phone aren’t authorized to make such changes to your account.
Now that you’ve straightened out your finance charges, commit yourself to paying a multiple of your minimum payment each month, starting with your highest-interest card. Some belt-tightening once you’ve leveraged away most of the interest will cause those finance charges – and those debts – to disappear quickly.