When it comes to paying down credit card debt, one of the biggest factors as to how long it will take to pay down that debt is the interest associated with the credit cards. The higher the interest, the longer it will take to pay off the debt.
While credit card interest APR is actually calculated daily, one can always perform a rough estimate of the interest money they pay every year by performing simple interest math. That is to say if someone has $10,000 in credit card debt at 10 percent, then they’ll pay about $1,000 a year to have that debt. If the interest rate is 30 percent, then they’ll be paying about $3,000. So a few percentage points can certainly make a big difference.
Call the Credit Card Companies and Ask for a Rate Reduction
This is especially good to try if the customer has a solid payment record. The credit card companies know that people with good credit often get offers from other credit card companies for balance transfers. They’d rather keep the credit account and gain the interest payments than see it go somewhere else. Don’t be afraid to mention any other credit card low interest rate balance transfer offers that have been received.
Get a Low Interest APR Loan from a Credit Union
While many credit cards have raised their interest rates, many credit unions have kept their personal loan rates relatively low. Credit unions are a great place to get a low APR personal loan. Seek out a credit union where the borrower can meet the requirements to join (many times this is employment or union affiliated) then apply for a loan. A partial collateral payment may be needed in order to secure the loan from the credit union.
Borrow Money From a Friend or Family Member
While it can certainly get sticky to ask family for money, it is truly the cheapest way to come about that money in most cases. As illustrated by the example above, a family member can still get a reasonable return on their money with a simple interest loan. Be sure to treat it like a bank loan and draw up terms including principal, interest and payment schedule.
Tap into the Home Equity Line
Another way to get money to pay off credit card high interest debt is to tap into the home equity line. A home equity line tends to hover near mortgage interest rates and will most likely be much lower than the credit card interest a credit card company is looking to charge. As a bonus, if structured correctly, that home equity line or refinance may even be tax deductible. This is a great way to use the accumulated wealth of a home to solve a credit card crisis.