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Getting Rid of Credit Card Debt

Posted By: Randy GageSeptember 4, 2011

If you are completely debt free – and by that I mean you own your home, car and everything else clear – congratulations.  You can take a few days off from the blog.  For the rest of you, please read on…

Debt is one of the most serious threats to your prosperity you will face.  So here’s your homework for today:

Get out the current or last statement from every credit card account you have.  Start a list, and write the amount you owe on each one.  Then look at the interest rate you are paying on each.  You might be shocked.

Most cards start out with an almost reasonable rate.  But if you take a cash advance, that gets a different rate.  Anywhere from 25 to more than 30 percent!  And when you send in your payment each month, they apply it to the installment debt, not the cash advance.  They make that the last thing you pay, so they make the most interest.

Then they send you those handy printed checks.  Write one and you may find that the interest rate on your entire balance goes up at least five percent.  Take their offer to skip a payment and discover that your rate goes up.  Accept their credit line increase and your rate may go up.  In fact, almost every “nice” offer they make to you has some fine print authorizing them to raise your rate.

Something else you should know about those nice credit card companies…

If you just send that minimum monthly payment they are so gracious to offer you, it will take you 41 years to pay off your balance!  So let’s go back to your list…

Add them all up and see what you really owe.  Most people avoid this, and like to think they are much better off than they actually are.  Get the real picture.  Pay attention to the different interest rates.  And there could be a huge difference between the cards.  Use that information to decide which cards you use, and how you make payments.

But first do this…

Call every single one that has a rate over 12 percent.  (Which is likely ALL of them.)  Call their customer service number and tell them you are seeing many offers for 5 and 6 percent balance transfers, and you are going to take advantage of some of them to reduce your debt.  Say something like, “Before I do that with your card, I wanted to see if you can lower my interest rate, because it seems quite high to me.”

Don’t be surprised if every single one lowers your rate!  It may only be two or three percent, but this adds up.  Write the new interest rates next to each card and start your plan to pay them all off.

Make the commitment that each month ON EVERY CARD, you will pay ALL of the new charges, and a certain amount to pay down the balance.  You can never get out of debt until you stop increasing it.  (Make sure you pay the current charges PLUS the monthly finance charge, or you’ll keep slipping backward.)  Put the most amount of extra money on the one with the highest interest rate.  Do this until it is completely paid off.

When that happens, cut up the card, but don’t close the account.  (Your credit report is much better to have open accounts with no balances.  This will get you lower interest rates and a better acceptance when you really need credit, to buy a car or home.)

Start paying more against the principle of the card with the next highest interest.  Then repeat this process till you are completely done.

Once you start this, you’ll start to get more credit card offers in the mail, many offering those balance transfer options of 4 or 5 percent.  Use them and transfer the cards that have the highest interest rates.

Now in this case, if you get card B and use it to transfer card A, go ahead and close the account for card A.  You haven’t diminished your credit worthiness or the amount of your credit line.  You’ve just reduced the interest you are paying.   Don’t fall in the trap of having old cards with zero balances around, tempting you to buy things you shouldn’t.

Do this simple process and you’ll be amazed how quickly you can retire your credit card debt.  Start this process today, and next post we’ll look at some other tips on getting out of debt.

-RG

 

 

41 comments on “Getting Rid of Credit Card Debt”

  1. All true!!! I was in a desperate situation some years ago with 9 credit cards and 4 loans. And one day, when I reached the bottom, it came to me from the Universe!!! SCIZORS!!! Yes, I cut to pieces all those colorfull temptations and threw them to the garbage bin! And from the next month I started just paying off the statements the way You have described it. So, in one year all my dembt went away! It was hard at first, but the measure was radical and correct. The same way I saved some of my family members and friends. It is some fun, You know, to tear those little fake freedom providers apart! 🙂 Now the only cards I use - Debet ones. Undescribable freedom and Luxury to know, that You spend YOUR OWN MONEY and nobody will ask You to pay for it more than You spent! Thank You!

  2. Being free of debt gives you freedom. Not just the usual freedom of buying what you want. It gives you freedom of leaving your job if you just can't take it anymore. It gives you the freedom of bankrolling a franchise or a new business.

  3. Federal Reserve Notes ARE DEBT!!! The entire banking system and especially credit cards are a total scam. The credit is created out of nothing more than your signature and a booking entry. If you still pay taxes and licensing fees you don't own any thing, you are merely a tenant and authorized user, regardless of any deeds or titles you may hold. Call them on their ponzi-contracts and scams, take back your LIVING status as a being of flesh and blood rather than a dead legal fiction called a person. Jcolehaley dot com

  4. There you go again talking on a topic that's relevant to me right at the right time. My next day off this week that's the number 1 item on my to do list, to list my debt load and know in better detail exactly where I'm at.

    I'm really looking forward to the rest of this series.

  5. Hi Randy,

    I'm the same as Matt above. Great timing! Thanks Randy for the awesome suggestions. I'd just decided that my goal between now and April 20th is to eliminate my family's debt. It's 160k. And I can do it.

    It IS about the project and wonderfulness of being debt-free, but honestly, it is more than that... it's about the person I can become by doing it that excites me more than anything.

    Alex

  6. Great post! Just heard about your blog from a friend, and am digging it. I definately should be more proactive in deciding what cards to pay off based on the interest rate!

  7. Switching balances to new cards with 0% balance transfer offer and then paying off each month is the way I got rid of my debt. It's tricky for those who keep flying round the world to events to get a handle on it though because every time it's a 'must.'

  8. Or for psychological reasons you could start paying off the credit card with the lowest balance. You might pay a little amount more interest, but the reward of paying off a card may be the stimulus to keep you going.

  9. Yo inicie el proceso de liberarme de mis tarjetas de crédito, gracias a que un día leí el libro de Georges S.Clason. Y empece a pagar mi deuda mala. Hoy en dia solo debo unos $1.000 US tal ves para ustedes en USA es muy poco pero en Colombia siempre suman. Yo creo que lo mas difícil es la tentación de encontrar tantas cosas en los supermercados y en los centros comerciales tan buenas y con descuentos. Pero debemos ser fuertes para no volver a copar las tarjetas con deuda mala.

  10. Very good info on credit cards and debt. Check out a short read, 'Damn, If I Had Known'. Thus author provides valuable tips on aspects from Credit, Credit Cards, Auto Financing, and Mortgages. Good read Randy.

  11. I cut the last credit cards in half 4 years ago. No more mail with credit card statements.
    I now have a prepaid credit card, so I can spent the money that is mine.

    That feels like freedom.

  12. Having been in debt for most of my adult life, I can relate to what you are saying. One thing I picked up from Dave Ramsey, that i think is very sound advice is take your credit card balance with the lowest dollar amount and pay that first with as much as you can. Then just make minimum payments on all the others. This will give you a sense of accomplishment, but also it will start eliminating debt one card at a time. By the inch it's a cinch, by the yard it's too hard.

  13. Dear Randy
    Do you recal the apparent contradiction raised in respons to your blog "When You Fail" where I contrary to what you might think experienced being extra related to you? The reply I gave was the giving up LOOKING GOOD as pathway to becoming who you really are. The layers of the onion peeled off ie the inauthentisities exposed, who you become is more and more you. It sounds crazy to our identity, but to your real self it's good news when you find yet another pretence to uncover.
    I have 4 Mastercard owing approximately 92k. I commit to have this sorted out by September 1. 2013. 2 years may sound reasonable, meaning looking to have mediocre justification content. Only I haven't yet expanded my prosperity consciousness to se I could have income grow faster. 
    Thank you to everyone who added good advice on this. Whether it be you've gone through it, or didn't fall pray to the temptation or imagined necessity in the first place. 
    There's a question comming up vividly played out in THE SECRET about not focusing on becoming debt free, as you then attract more. Is that true or false?

    Love and Respect - Pierre Leyssac, cph

      1. Before blaming myself for not being teachable about getting rid of credit card debt only memorizing what to do, as you've teached it, let me clarify. 
        More perfectly in timing your blog couldn't be. Last thursday in actuality I was authentic with my upline and revealed MY WHY for doing the business: to be debtfree. Debtfree as a motivator. Could you elaborate on if I'm trapped in a dead-end project or if it's a healthy way to go? 
        True or false? I mean so much of Wattles secrets was missing in The Secret. What I took from whatching the film, is that the vibration of desperation of being in debt that I am sending out attracts just more of the same frequency. 
        Practically what's missing obviously is effective actions. But is there a general lesson to be drawn in terms of focusing on a better outcome? 

          1. This advise of yours is Stage 5 (tribal) leadership: life is great. The different is crystal clear 'debtfree' is very distinct from 'out of debt'. I could not myself have "word'ed" it like you have done here. I am to put in the effort. The 92K is in danish currency. Yet I have ahead to discover how you are paid back the equivalent for the clearing.

            Love and Respect - Pierre Leyssac, cph

  14. Great post again. Glad you threw in some ways to get the interest rate reduced. When calling it is also good to ask them to waive the annual fee related to the card. Works well. Consumer debt is very dangerous and destructive to our prosperity.

    On the other side, credit cards are the best tool of the 21st century. They are the quickest ways to raise capital for investing and for business. If we play the game right we can very quickly get a credit facility of £100k at 0% interest for up to 24 months. (3% to have the cash deposited into our accounts) Inflation is running at about 8% so the free debt is being wiped away by the governments actions. We get paid 5% per year to use some one else money _very nice 🙂

    They also insure us against fraud and scammers.
    They boost our credit rating every time we use them and especially if we over pay by even a £1 then our credit scores go up.
    They make it easy to track our expenses. Use one with air miles and cash back and we get lots of free stuff that we won't get with debit cards.

    Used right credit cards are amazing used wrong they will destroy a persons chance for real prosperity.

    Important not the throw the baby out with the bath water. But for compulsive spenders then this is a great post.

  15. I'm not agree with You when it come to in wich order You should pay off your debt.

    If You go by "highest interest", it can take LONGER to be debt free than If you start with the smallest debt and put as much money You can on this one, and minimum on all other debts.

    When it's payed off, start with the new lowest debt, transfer the amount You paid on the debt that You just got rid off

    Do this until all debts are paid off

    Usally, You'll be debt free faster, a lot faster.

    It's a MYTH that You should start paing the debt with highest interest.

    Hope I get You to do some critcial thinking RG, and ... google: debt snowball

  16. Thank you, thank you!Reading this today made me phone a bank where I have two (terrible high rate) debts, and they changed it,put it together in a loan instead,which gave me some thousand extra to pay another credit,and finally I have ONE loan instead of three credits.Why I didn´t do this before?I did not have a clue that it was possible!Maybe my subconsious mind thought it was the day today,though lots have happened the last few month with me and my moneyconsiousness.Thank you!!!!!You made my day!

  17. I returned my credit card to my bank last month because it is too easy for me to buy things I don´t really need with it.

    So I only have a debit card for something I can only pay online and that´s it.

    No more debt on my credit card!

    To our massive success

    Volker

  18. I agree with the poster. Credit card helps everybody now-a-days. It’s very difficult to carry cash money all the time. Most of the person has more than one credit card in this present scenario. The main problem of credit card is that the interest rate of different type of credit card is different. Credit card is also responsible for incurring huge debts. Many people suffer from this type of credit card debt. You can follow some strategies or tips for <a href="http://www.debtconsolidationcare.com/creditcardtips.html">paying off credit cards</a>.

  19. I agree with the poster. Credit card helps everybody now-a-days. It’s very difficult to carry cash money all the time. Most of the person has more than one credit card in this present scenario. The main problem of credit card is that the interest rate of different type of credit card is different. Credit card is also responsible for incurring huge debts. Many people suffer from this type of credit card debt. You can follow some strategies or tips for <a href="http://www.debtconsolidationcare.com/creditcardtips.html">paying off credit cards</a>.

  20. Have you checked out Payoneer? You will get $25 (£17/€19) free when you sign up through this link! Get paid directly to your very own Payoneer Prepaid Debit MasterCard, available to over 200 countries worldwide!  http://web.vu/card

  21. Have you checked out Payoneer? You will get $25 (£17/€19) free when you sign up through this link! Get paid directly to your very own Payoneer Prepaid Debit MasterCard, available to over 200 countries worldwide!  http://web.vu/card

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  • 41 comments on “Getting Rid of Credit Card Debt”

    1. All true!!! I was in a desperate situation some years ago with 9 credit cards and 4 loans. And one day, when I reached the bottom, it came to me from the Universe!!! SCIZORS!!! Yes, I cut to pieces all those colorfull temptations and threw them to the garbage bin! And from the next month I started just paying off the statements the way You have described it. So, in one year all my dembt went away! It was hard at first, but the measure was radical and correct. The same way I saved some of my family members and friends. It is some fun, You know, to tear those little fake freedom providers apart! 🙂 Now the only cards I use - Debet ones. Undescribable freedom and Luxury to know, that You spend YOUR OWN MONEY and nobody will ask You to pay for it more than You spent! Thank You!

    2. Being free of debt gives you freedom. Not just the usual freedom of buying what you want. It gives you freedom of leaving your job if you just can't take it anymore. It gives you the freedom of bankrolling a franchise or a new business.

    3. Federal Reserve Notes ARE DEBT!!! The entire banking system and especially credit cards are a total scam. The credit is created out of nothing more than your signature and a booking entry. If you still pay taxes and licensing fees you don't own any thing, you are merely a tenant and authorized user, regardless of any deeds or titles you may hold. Call them on their ponzi-contracts and scams, take back your LIVING status as a being of flesh and blood rather than a dead legal fiction called a person. Jcolehaley dot com

    4. There you go again talking on a topic that's relevant to me right at the right time. My next day off this week that's the number 1 item on my to do list, to list my debt load and know in better detail exactly where I'm at.

      I'm really looking forward to the rest of this series.

    5. Hi Randy,

      I'm the same as Matt above. Great timing! Thanks Randy for the awesome suggestions. I'd just decided that my goal between now and April 20th is to eliminate my family's debt. It's 160k. And I can do it.

      It IS about the project and wonderfulness of being debt-free, but honestly, it is more than that... it's about the person I can become by doing it that excites me more than anything.

      Alex

    6. Great post! Just heard about your blog from a friend, and am digging it. I definately should be more proactive in deciding what cards to pay off based on the interest rate!

    7. Switching balances to new cards with 0% balance transfer offer and then paying off each month is the way I got rid of my debt. It's tricky for those who keep flying round the world to events to get a handle on it though because every time it's a 'must.'

    8. Or for psychological reasons you could start paying off the credit card with the lowest balance. You might pay a little amount more interest, but the reward of paying off a card may be the stimulus to keep you going.

    9. Yo inicie el proceso de liberarme de mis tarjetas de crédito, gracias a que un día leí el libro de Georges S.Clason. Y empece a pagar mi deuda mala. Hoy en dia solo debo unos $1.000 US tal ves para ustedes en USA es muy poco pero en Colombia siempre suman. Yo creo que lo mas difícil es la tentación de encontrar tantas cosas en los supermercados y en los centros comerciales tan buenas y con descuentos. Pero debemos ser fuertes para no volver a copar las tarjetas con deuda mala.

    10. Very good info on credit cards and debt. Check out a short read, 'Damn, If I Had Known'. Thus author provides valuable tips on aspects from Credit, Credit Cards, Auto Financing, and Mortgages. Good read Randy.

    11. I cut the last credit cards in half 4 years ago. No more mail with credit card statements.
      I now have a prepaid credit card, so I can spent the money that is mine.

      That feels like freedom.

    12. Having been in debt for most of my adult life, I can relate to what you are saying. One thing I picked up from Dave Ramsey, that i think is very sound advice is take your credit card balance with the lowest dollar amount and pay that first with as much as you can. Then just make minimum payments on all the others. This will give you a sense of accomplishment, but also it will start eliminating debt one card at a time. By the inch it's a cinch, by the yard it's too hard.

    13. Dear Randy
      Do you recal the apparent contradiction raised in respons to your blog "When You Fail" where I contrary to what you might think experienced being extra related to you? The reply I gave was the giving up LOOKING GOOD as pathway to becoming who you really are. The layers of the onion peeled off ie the inauthentisities exposed, who you become is more and more you. It sounds crazy to our identity, but to your real self it's good news when you find yet another pretence to uncover.
      I have 4 Mastercard owing approximately 92k. I commit to have this sorted out by September 1. 2013. 2 years may sound reasonable, meaning looking to have mediocre justification content. Only I haven't yet expanded my prosperity consciousness to se I could have income grow faster. 
      Thank you to everyone who added good advice on this. Whether it be you've gone through it, or didn't fall pray to the temptation or imagined necessity in the first place. 
      There's a question comming up vividly played out in THE SECRET about not focusing on becoming debt free, as you then attract more. Is that true or false?

      Love and Respect - Pierre Leyssac, cph

        1. Before blaming myself for not being teachable about getting rid of credit card debt only memorizing what to do, as you've teached it, let me clarify. 
          More perfectly in timing your blog couldn't be. Last thursday in actuality I was authentic with my upline and revealed MY WHY for doing the business: to be debtfree. Debtfree as a motivator. Could you elaborate on if I'm trapped in a dead-end project or if it's a healthy way to go? 
          True or false? I mean so much of Wattles secrets was missing in The Secret. What I took from whatching the film, is that the vibration of desperation of being in debt that I am sending out attracts just more of the same frequency. 
          Practically what's missing obviously is effective actions. But is there a general lesson to be drawn in terms of focusing on a better outcome? 

            1. This advise of yours is Stage 5 (tribal) leadership: life is great. The different is crystal clear 'debtfree' is very distinct from 'out of debt'. I could not myself have "word'ed" it like you have done here. I am to put in the effort. The 92K is in danish currency. Yet I have ahead to discover how you are paid back the equivalent for the clearing.

              Love and Respect - Pierre Leyssac, cph

    14. Great post again. Glad you threw in some ways to get the interest rate reduced. When calling it is also good to ask them to waive the annual fee related to the card. Works well. Consumer debt is very dangerous and destructive to our prosperity.

      On the other side, credit cards are the best tool of the 21st century. They are the quickest ways to raise capital for investing and for business. If we play the game right we can very quickly get a credit facility of £100k at 0% interest for up to 24 months. (3% to have the cash deposited into our accounts) Inflation is running at about 8% so the free debt is being wiped away by the governments actions. We get paid 5% per year to use some one else money _very nice 🙂

      They also insure us against fraud and scammers.
      They boost our credit rating every time we use them and especially if we over pay by even a £1 then our credit scores go up.
      They make it easy to track our expenses. Use one with air miles and cash back and we get lots of free stuff that we won't get with debit cards.

      Used right credit cards are amazing used wrong they will destroy a persons chance for real prosperity.

      Important not the throw the baby out with the bath water. But for compulsive spenders then this is a great post.

    15. I'm not agree with You when it come to in wich order You should pay off your debt.

      If You go by "highest interest", it can take LONGER to be debt free than If you start with the smallest debt and put as much money You can on this one, and minimum on all other debts.

      When it's payed off, start with the new lowest debt, transfer the amount You paid on the debt that You just got rid off

      Do this until all debts are paid off

      Usally, You'll be debt free faster, a lot faster.

      It's a MYTH that You should start paing the debt with highest interest.

      Hope I get You to do some critcial thinking RG, and ... google: debt snowball

    16. Thank you, thank you!Reading this today made me phone a bank where I have two (terrible high rate) debts, and they changed it,put it together in a loan instead,which gave me some thousand extra to pay another credit,and finally I have ONE loan instead of three credits.Why I didn´t do this before?I did not have a clue that it was possible!Maybe my subconsious mind thought it was the day today,though lots have happened the last few month with me and my moneyconsiousness.Thank you!!!!!You made my day!

    17. I returned my credit card to my bank last month because it is too easy for me to buy things I don´t really need with it.

      So I only have a debit card for something I can only pay online and that´s it.

      No more debt on my credit card!

      To our massive success

      Volker

    18. I agree with the poster. Credit card helps everybody now-a-days. It’s very difficult to carry cash money all the time. Most of the person has more than one credit card in this present scenario. The main problem of credit card is that the interest rate of different type of credit card is different. Credit card is also responsible for incurring huge debts. Many people suffer from this type of credit card debt. You can follow some strategies or tips for <a href="http://www.debtconsolidationcare.com/creditcardtips.html">paying off credit cards</a>.

    19. I agree with the poster. Credit card helps everybody now-a-days. It’s very difficult to carry cash money all the time. Most of the person has more than one credit card in this present scenario. The main problem of credit card is that the interest rate of different type of credit card is different. Credit card is also responsible for incurring huge debts. Many people suffer from this type of credit card debt. You can follow some strategies or tips for <a href="http://www.debtconsolidationcare.com/creditcardtips.html">paying off credit cards</a>.

    20. Have you checked out Payoneer? You will get $25 (£17/€19) free when you sign up through this link! Get paid directly to your very own Payoneer Prepaid Debit MasterCard, available to over 200 countries worldwide!  http://web.vu/card

    21. Have you checked out Payoneer? You will get $25 (£17/€19) free when you sign up through this link! Get paid directly to your very own Payoneer Prepaid Debit MasterCard, available to over 200 countries worldwide!  http://web.vu/card

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