How to Eliminate Credit Card Debt Without Bankruptcy

In order to feel truly financially secure many of us look to eliminate credit card debt completely. However, this might not be the best approach. A little bit of debt is a very good thing. As long as you maintain control it is best to avoid completely eliminating your debts.

This may not seem to make a lot of sense but keeping some debts open and active can actually help your credit. Your individual credit score hinges on your ability to make consistent payments on your bills. If you completely eliminate credit card debt you may fail to adequately show a consistent payment history.

Also, many people like to close their accounts after they eliminate credit card debt. This isn’t the best approach, either. The more active accounts you have, the better your individual report will look to future creditors. When you eliminate credit card debt you still want to keep the cards active for show.

When a potential creditor looks at your report he is looking to see your past history as well as your current capacity to pay. The last thing that a creditor wants to see is a bunch of closed accounts. This is especially true if the person decided to eliminate credit card debt all at once and closed all of the accounts at once.

When the accounts are abruptly closed this sends a red flag to the potential creditor. He really wants to track your payment history but instead he faces a brick wall of closed accounts. While it is great to have your accounts paid in full it really doesn’t do much for your payment history.

I used to work as a loan officer and we would cringe when we had a potential client who barely passed the rigid requirements for a low interest loan. In many cases the individual didn’t meet the requirements because he abruptly decided to eliminate credit card debt. Following that, he closed each of the accounts.

We really needed to see current action on his report but sadly there was none. We either had to turn down the application or offer a loan with a higher interest rate. In order to keep a strong credit report it is important to keep your accounts active and open.

This is not to say that you shouldn’t eliminate credit card debt. However, it is better to eliminate it every month by paying a small balance in full rather than paying everything off in one lump and closing the accounts.

Sue Hicks, St Albans

Best Way to Eliminate Credit Card Debt For Free, Legally and Ethically

One of the best things you can do for your personal finances is to eliminate credit card debt. It is very simple to actually get into the debt trap, but getting out is a little more complicated. While it is complicated, it is certainly not impossible to eliminate credit card debt, especially with some assistance.

First, if you have a small amount of debt you can try to transfer your credit card balances from a card with monthly interest to a card that offers a period of zero percent interest. If you have good overall credit there are many companies that should be willing to extend a credit card to you with this offer on credit balances. Most card companies offer this as an introductory period, generally for around six months to a year. Depending on the size of your debt, this should be enough time to eliminate credit card debt because you are paying directly to your debt and not finance charges. Again, if you have larger amounts of debt this may not be the way to go if you cannot afford the payments to pay off the debt before the introductory zero percent interest period is over.

If you do have larger debt amounts, you can either use a home equity line of credit or use a credit counselling service to eliminate credit card debt. Using a home equity line is usually only beneficial if you have a large credit card balance and cannot escape a large percentage rate on your credit card financing for various reasons. If you use a home equity line, you can then get a lower interest rate through the bank and eliminate credit card debt by paying the balance off in full. If this option will not work for your situation, you can use the assistance of a credit counselling service or a credit elimination service. Credit counseling services negotiate with credit card companies to get lower monthly payments that go towards the debt and not the interest so you pay off the debt faster. Credit elimination services are usually a last resort and for use in extreme situations. These companies work on your behalf to negotiate with credit card companies to eliminate credit card debt without payment.

As you can see, there are several options to eliminate credit card debt. With some calling, paperwork and determination it can be done much more quickly than by paying the minimum payment each month on your credit card statement.

James Green. Poole Dorset

Credit Card Debt, Eliminate Free - Non Profit

I got my first credit card when I was in university. By the time I graduated four years later with my degree, I not only had my student loan to pay, but I now had some major credit card bills as well. Ten years later, I think that I am probably still paying for my spring back from back then. Interest rates and continued spending have put me £12,000 in debt on just my credit cards. While I have excellent credit, it is more difficult to get loans when companies see how much money you owe. My husband and I want to move to a bigger and nicer house within the next several years. Before we can get a higher mortgage, we need to eliminate credit card debt.

Granted, that is so much easier said than done and I am by no means one who should be talking. The very first step that we took to eliminate credit card debt was to transfer some of our balances to 0% interest cards. By doing that simple step, we managed to save almost £25 per month from interest charges. That extra £25 now goes to paying off our balance. Within a year, that means we will have paid almost an extra £300 towards our debt. I highly recommend finding a way to transfer some balances to lower interest rates as the first step to eliminate credit card debt.

Also, knowing that I need to eliminate credit card debt, I took on a part-time job in addition to my full-time job. We didn't see one another as often as we did before but we have learned to appreciate each other more as well. I don't like having a part-time job but I have managed to put all of those earnings toward our goal - eliminate credit card debt. That was an extra £150 per month that I was able to pay towards our cards. I am quite a bit more tired than I used to be with working 2 jobs, but I know that I will be sleeping in a nicer house before too long. I am absolutely determined to eliminate credit card debt before it controls our lives. It has for this long and I have grown way too tired of it. Some friends of ours filed for bankruptcy. That was their easy way to eliminate credit card debt. I personally could not do that. I have maintained an excellent credit score for this many years and I take pride in that. I have chosen to take responsibility for and eliminate my credit card debt the traditional way. If I have debt, it is my fault. All of my credit card debt was from purchasing things, not from items I could not help. I accrued it and I will eliminate credit card debt the honest way, legally and ethically. It may take me longer to eliminate credit card debt than they did, but I will do it. We need to pinch some pennies and tighten our budgets in order to eliminate credit card debt and we will manage. I'm determined to succeed.

Carol Caunter, Birmingham

Tips on Howto Eliminate Credit Card Debt, Free Advice

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