How To Pay Off Credit Cards Without Affecting Your Credit Score
Credit card debt is one of the biggest financial problems in today's society. Credit cards are convenient, but unfortunately they are also easy to abuse by buying things that you couldn't otherwise afford. There's also a psychological effect to buying with a credit card - it just doesn't seem as "real" as pulling cold hard cash out of your wallet or purse and handing it over to someone else. Once the debt accumulates, the bad news generally starts to sink in - you have to pay off credit cards after charging money on them.
If credit card debt is allowed to accumulate, it can quickly become unmanageable. It's usually at this point that people start to look for the most effective ways of dealing with the debt.
If you're not careful, poor management of credit card repayment can have a negative effective on your credit rating. The following tips will help to maintain a good credit score while paying off outstanding debt.
Make The Minimum Payments
If you've chosen to focus on paying off one card at a time, you need to be sure you continue making the minimum payments on all the other cards. If you stop doing so, even for a short period of time, it can have a negative effect on your credit rating.
Not paying the minimum payment will also cause interest charges and other fees from the credit card company to be added to your outstanding balance, which can cause the original debt to double or even triple.
Negotiate a Better Deal
If you are simply not able to keep up with all the minimum payments while paying off your credit cards, call the credit card companies and see if you can negotiate a better deal.
You may be able to get a better interest rate which can lower your payment, freeing up more money to pay down the debt. You also might be able to get a certain amount of time in which you do not have to make any payments, letting you focus on other cards. The interest will still accumulate, but non-payment fees will not.
Switch To A Better Interest Rate
There are a couple of routes you can take to get a better interest rate, and as a result lower payments or quicker payoff. The first - and ultimately the best - is to get a debt consolidation loan. This loan will let you combine all your higher interest debt into a single loan with a lower rate and single payment each month.
The other alternative is to apply for a lower interest credit card and then transfer the balance from your current card to the new one, possibly even canceling the old one. There are many cards that offer a promotional period with no interest at all, so you can save money on interest and focus on getting the balance paid off.