Now that you’ve taken inventory of all the debt you currently have, it’s time to do something about the amount of bad debt you have. You probably had some fun getting into debt, and took your time building that massive portfolio of outstanding accounts; unfortunately, getting out of debt isn’t as enjoyable! You will however, start feeling an enormous weight lifting off your shoulders as you start creating a plan to take over the debt monster once and for all- so let’s get started!
Lesson Two: Credit Card Debt Elimination
Easing debt anxiety is just around the corner, so close that the debt monster is groaning in despair!
Pull out your “bad” debt list from Lesson One. It’s time to play with the credit card companies!
Lower Interest if You Please
One by one, call each of your credit card issuers and try to get them to lower your interest payment. People who have a track record of making their payments on time in the past will have a higher success rate at this task, but it never hurts to try and you may be surprised at how much you can save just by asking!
Here is what you could say when you call your credit card accounts:
You: I just received a credit card offer in the mail that says I could transfer my balances for 5% interest. Your service has been really good and I don’t want to switch credit cards, but even though I’ve been using this card for 4 years, I’m still paying 18% interest. I’m really going to have to switch cards to save some money unless you decide to lower my interest rate.
Credit card company will give you some mumbo jumbo about your rate being the going rate, and maybe put you on hold for awhile as they check over your payment history. When they’re ready to talk to you again, you could follow up with something like this:
You: It may be a reasonable rate, or 18% may be the going rate, but since this other credit card is offering me 5.9%, I’m going to pay a whole lot less by transferring my balance to them. I need you to reduce my interest rate to at least 10%.
The credit card company will probably put you on hold while the representative checks with their supervisor or whoever is in charge in the mysterious and mystical world of credit card companies, behind the scenes. They just may come back and say they can lower it to 12% or some other number that’s higher than you requested but lower than what you had been paying. Accept the new rate and celebrate (but don’t spend very much on your celebration or you’ve wasted your time!)
Developing Your Plan of Attack
You can’t expect to bury the debt monster without a solid plan of action as it’s a very strong creature that steals from the Terminator’s famous line, “I’ll be back”; and back the debt will definitely be if you don’t have a plan.
On a new sheet of paper or in a new spreadsheet, rewrite the list so that the accounts that have the highest interest rate are on the top of the list, with the lower interest accounts at the bottom. This is the order in which the accounts should be paid off, generally. The reason why it is better to pay off higher interest accounts first is because less of your payment is going towards the principal amount owed.