7 Creative Ways to Wipe Out Credit Card Debt

Key Takeaways
  • Eliminating credit card debt is a challenge due to high-interest rates, low monthly minimum monthly, and interest compounding daily.
  • Paying off high-interest credit card debt requires a plan.
  • In many cases, earning more and spending less is not enough to payoff existing balances.
  • Negotiating new loan terms can be the secret to eliminating high-interest credit card debts.

Today, using credit cards is as much a part of the American experience as baseball and apple pie. The trouble is that easy access, high carrying costs, low payment requirements, and interest compounding daily work against achieving a debt-free life.

When you use credit for everyday purchases,bridge the gap between income and expenses, or rely on debt for your emergency fund, the balances can snowball and become problematic. If you struggle to pay your bills, here are seven creative ways to wipe out credit card debt.

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  • Start with your budget. A budget essentially assesses how much you owe and then directs payments to those accounts based on your financial priorities. It is an excellent tool to help you recognize where you spend, give insights needed to make adjustments, and uncover hidden expenses that deliver little or no value.
  • Look for earning opportunities that are not time sucks. Gig work can be an effective way to achieve the extra cash needed to eliminate debt. It can also result in earning less than minimum wage when considering your time and expenses. Before jumping onto the gig bandwagon, calculate the amount of time it will take to make what you need. Otherwise, it could become an expensive hobby.
  • Establish a debt payoff plan. Regardless of how much you owe or the route you choose, have a plan and write it down. Put it in a place you can review it often. You might consider taping it to the mirror in your bathroom or enlisting the help of a spending app that sends motivational texts and reminders. Get in the habit of reviewing your debt elimination plan every pay period to measure your progress, make adjustments, and stay motivated.
  • Never ignore debt collection efforts. Avoiding debt collectors could result in faster legal actions, which often mean wage garnishments, account levies, or liens against your property.

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  • Always request verification of the debt, even if you believe you owe the money. Delinquent accounts often end up with debt collectors. After receiving your first collection notice, you have the right to request verification of the debt. When the creditor sends you the validation, compare the first date of delinquency with your state’s statute of limitations. Every state restricts the time a creditor can sue. After the statute of limitations passes, the creditor cannot initiate legal action against you for the debt. However, you could say or do something that will give the creditor more time to sue.
  • Look for ways to negotiate the payment and payoff amount. Delinquent accounts often give you leverage to negotiate new loan terms, including forgiveness of a portion of the amount owed. If you are behind on an account, ask the creditor to adjust the loan terms,helping you eliminate the debt faster.
  • Let a professional agency negotiate with creditors on your behalf. Contacting creditors and engaging with debt collection agencies is an intimidating prospect. If you are uncomfortable talking with debt collectors, you can hire a debt settlement agency to do the work for you. The company will work to obtain forgiveness of a portion of your debt, renegotiate the loan terms, and help you make payments once they reach an arrangement you find acceptable.

Falling behind on your bills can feel like a devastating event. While it does have negative consequences, there are ways to use the financial hardship to your advantage. It may be possible to pay less than you owe and eliminate high-interest debts through the debt settlement process.

  • Can I settle debts for less than I owe?

    When you face financial hardship, you might be able to pay less than the total amount owed on delinquent accounts. The negotiation process requires you to have a financial difficulty that prevents you from repaying the debt in full and can save money for a lump sum payment.

  • Is it possible to change the terms of my debt contracts?

    Yes. When you default on a loan, the creditor can change the terms to allow you to pay off the debt for a less amount and often in less time.

  • Is debt settlement a legal debt relief option?

    Yes. Debt settlement is a highly regulated industry that provides debt relief by allowing you to pay less than the total amount owed on high-interest debt.