3 Solutions for Lowering Credit Card Payments
By lowering or eliminating APR, you can get out of debt faster for less each month.
Credit card debt can be tricky to manage because the payments change based on how much you owe. When you overcharge, your required monthly payment increases right alongside your balance. Eventually, you can reach a point where your credit obligations start cutting into your budget. If it’s getting hard to afford your debt, it’s time to explore solutions for lowering credit card payments.
The secret lies in the reducing the APR that’s applied to your debt. High credit card interest charges eat up over half of each payment you make. By reducing or eliminating those interest charges, more of each payment goes to eliminating the debt you owe (principal).
When paired with the solutions we describe below, you can get out of debt faster even though you pay less money each month. You essentially find a more efficient way to pay back what you owe.
Solution #1: Creditor negotiation
This solution is do-it-yourself. You contact each creditor individually to negotiate a lower interest rate and adjusted repayment schedule. The creditor may require that you freeze your account while you work through the repayment plan. This means you won’t be able to use make new charges on that card while you pay off your debt.
Results with this option can vary. It’s really up to your individual creditors whether they’re willing to agree to a lower repayment schedule. These factors affect your chances for success:
- How long have you been a customer?
- Is your account current and have you ever missed any payments?
- Have you committed to a repayment plan before and failed to follow through?
- Has your credit score improved since you opened the account?
- Have you reached your credit limit?
Keep in mind that you may have success with one creditor, but not another. If enough creditors agree to lower your credit card payments it may provide the reduction you need. If not, you may need to try a different solution.
Solution #2: Personal debt consolidation loan
This is a type of do-it-yourself debt consolidation. You take out an unsecured personal loan at a low interest rate for an amount large enough to pay off your credit cards. This leaves you with only the loan to repay.
In most cases, this type of consolidation can lower credit card payments outright. However, you can reduce the payments even further by adjusting the term of the loan:
- A loan with a longer term will reduce the monthly payments, but increase total cost
- Loans with shorter terms have higher monthly payments but lower total interest charges, so they have a lower cost.
You can use a loan calculator or work with the lender to find a payment that works for your budget. Just be careful after you consolidate; if you start making credit card purchases again before you pay off the loan, your debt obligations can end up even higher than when you started. If this happens, you may need to re-consolidate.
Solutions #3: Debt management program
This is a voluntary debt repayment plan that you can enroll in through a credit counselling agency. It’s basically similar to Solution 1, except instead of negotiating yourself, you bring in a team of professionals. Credit counsellors often have more success negotiating because they have established relationships with creditors. Enlisting outside help also shows creditors that you’re committed to reducing your debt, so they’re more willing to sign off.
This is the solution we offer at Consolidated Credit. We have a proven record of helping clients:
- Reduce their total monthly credit card payments by 30% to 50%
- Lower interest rates to between 0% and 11%
- Get out of debt within 36 to 60 payments