Mon 19 Oct 2009
3 ways to pay off costly debt
Posted by lizweston under Credit & Debt, Credit Cards, Q&A with Liz
1 Comment
Dear Liz: I’m trying to pay off credit card debt and was told to call my issuers to negotiate a rate lower than what I’m currently paying, which is about 8%. One issuer lowered the rate to 5%, another refused to make any changes and a third told me the rates on all accounts were about to be raised 2 percentage points. What to do now?
Answer: The fact you could get any issuer to lower your rate in today’s environment indicates you have very high credit scores. People with less stellar credit have reported having their rates raised or credit limits lowered when they tried asking for rate concessions.
You could investigate the low-rate balance-transfer offers at sites such as CardRatings .com, CreditCards.com and the finance forum at FatWallet .com. Be aware that balance-transfer offers are getting less generous, however, so there’s no guarantee you’ll find another low rate when the current deal expires. You also need to factor in fees, because many balance-transfer deals add 3% to 4% to your balance.
Another option is to pay off your credit card debt with a three-year personal loan from your credit union or a social lending site such as Prosper or Lending Club. The rate you pay may be somewhat higher than you’re paying now, but it will be fixed, which means you won’t face a massive rate hike down the road — something that’s always a possibility with credit cards.










I got so fed up with the credit cards treating me the way they do that I stopped using them, cut them up and started using a revolving line of credit from my local credit union. That way, my available amount and interest rate are fixed, and as soon as I pay it back, I can borrow from it again. The credit card companies no longer deserve my business.