How To Pay Off Credit Cards

by Scott on July 11, 2008

Are you wondering “How to Pay Off Credit Cards?” We are all looking for ways to make more money these days, but sometimes cutting debt can be more effective to our financial health. When my wife and I were first married we had accumulated credit card debt and were making the minimum monthly payments. Each month we payed the minimum, but were frustrated with the high interest rates and feelings of hopelessness. Feeling hopeless is the worst part of debt, and can lead to unhealthy spending habits. You might start thinking that you will never pay off your credit cards, so why not keep spending? When we carried a balance on our credit cards, I often thought that we would never be able to get out of debt and felt buyers remorse for purchasing the new computer.

If you are asking “How To Pay Off Credit Cards?”, here are some great ways to take action over your finances and stop feeling hopeless. These ideas will only work if you take action, and apply the money to your credit card payments. Don’t spend the new money, use it to pay off your debt.

1. Stop using credit cards. Just stop! Don’t put one more purchase on your cards. Start using cash or your debit card.

2. In case you read over #1 quickly. You can still spend money, just don’t use credit cards. If you are tempted, ask a friend to hold your credit card for you. My favorite idea that I read once, put your credit card in a bowl of water and freeze it. Makes it tougher the next time you try and take the card to the store.

3. Aha! Almost forgot the online purchases, you don’t need a card for those. This one will take some action. If you struggle with buying things on the internet, call your credit card company and ask to put a hold for new spending. Don’t close it, just place a temporary hold until you payoff your credit cards. I know your thinking right now “What If I’m in an emergency and need my credit card?” Well, chances are that emergency won’t ever happen. If it does, you can access your Emergency Account, or call your credit card company and ask to release the hold.

4. Sell something. Utilize Craigslist, ebay, or have a garage sale. You probably have items laying around your apartment or house that you no longer use. Why let those assets sit around collecting dust? Turn those dusty assets into cash and pay off your credit cards. Here’s a good barometer to help determine a dusty asset. Have you used the item in the last 3 years? If not, sell it!

Here are some items that could be your “dusty assets”

-baby clothes
-toys
-tools (Do you own any duplicate tools?)
-sports equipment (tennis rackets, tennis balls) What? Checkout ebay and you could find this to be a good source of passive income too! Just type tennis balls on ebay. You will be amazed. I have shipped them as far as Alaska. A lady used them for her sled dogs. I’m serious!
-books (college textbooks)
-electronics (old computer, second or third tv, dvd’s, video games)
-collectibles (Disney and Star Wars are always hot on ebay)

Do you have a hobby you started but have neglected for the last 3 years? I had a dream of scuba diving when I was in high school and college. 15 years later and three moves, I still had the equipment. It was clearly time to sell the weight belt, flippers, mask, and wetsuit. Sell your “dusty assets” and pay off those credit cards.

5. Call your credit card company and ask them to lower your rate. You might be thinking, “Yeah Right?” Seriously, it really can happen. I have called my card company and they did it. You can tell them that you are looking at consolidating debt and might move to another company.

6. Transfer your debt to a new credit card. This can be a good option if you are organized and have good credit. This might be a good time to try that 0% interest for 6 months ad you see in the mail or online. But be careful! You really need to be organized and diligent with your payments. Read all of the disclosure statements and verify when payments are due. If you have several late fees and have poor credit, you might not be able to open another credit card. You may only want to do this if you have the ability to receive a lower rate. Don’t try this if you are just trying to avoid paying your debts.

7. Cancel a service. Not your trash or car insurance. Cancel something you can do without for 3-12 months. Do you really need all 500 premium cable channels? Probably not. Take that extra savings and apply it to your credit card debt.

-Downgrade your cellphone service or try a prepaid cell phone.
-Try a free internet service for 3 months
-Stop eating out. Make a homemade pizza instead. Start making your own coffee, rather than going to Starbucks.
-Stop renting movies. Go to your local library and borrow a dvd.

8. Ask your family for a loan. This can be hard to do, but it could save you a ton of money. If your parents or grandparents have money in a money market or cd and are willing to make a loan, you could make them an offer. You need to treat this transaction seriously and not skip payments or be late. If your current credit card rate is 12% or higher, you could ask your family to create new terms for your loan. Imagine how quickly you could pay off your credit cards with a 7% or lower loan. Again, this is family, don’t miss a payment and ruin a good thing.

How to pay off credit cards? Tired of feeling hopeless and frustrated with your credit card debt? Take some action! You will see an immediate reduction on your credit card debt if you sell some “dusty assets” and ask your credit card company to lower your rate. Next, try downsizing some of your monthly expenditures like eating out, cable, internet, and movie rentals. Finally, you can look to consolidate debt, transfer to a lower credit card company, or ask your family for a loan. Remember to treat that family loan as a real loan, and don’t be delinquent. If you have some debt reduction strategies that have worked for you, please let me know.

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{ 3 comments… read them below or add one }

1 heidi July 11, 2008 at 12:40 pm

These are great tips. I think I will start witht he dusty ebay idea. Thanks!

2 pinaymommy July 19, 2008 at 1:41 pm

thank you very much for sharing tips on lessening credit card bills. kudos to a great post!

3 Laura @ Passive Income Dorm February 19, 2011 at 4:53 pm

Just as you suggested, asking your credit card company to lower your rates really can help. You’ve got to be ready to hear them say “no” and be prepared to be firm about your request. I have also found that I need to have all of my monthly payments setup to automatically draft from my accounts. I don’t have to stress about missing any payments by accident and therefore, don’t have to worry about $30+ late fees.

I’ve heard about freezing your cards! The only problem with this is that if you have problems with overspending, you’ll find a way around this. One mental trick I use is to think about how much I earn an hour and then to think about how many hours I’d have to work to pay for an item. Then if you’re thinking about putting an item on a credit card, factor in the interest.

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