How Can I Lower Credit Card Payments?
November 19th, 2008 by Kenneth Long
If you are like most other Americans, you may have found that minimum payments on credit cards are starting to increase. To make matters more difficult, your creditors may raise your payments substantially if you have shown any signs of financial difficulty. There are ways to lower your monthly payments.
Debt Relief Companies
If you are responding to a television commercial or one of those internet ads for debt relief, then you may be taken for a ride.; Companies that pay for such expensive advertising tend to focus on only the debt relief solution that they provide. Additionally, their services are costly.
You can get lower credit card payments without a consolidation loan, debt settlement or bankruptcy. How you do so depends on your disposable income.
Prove your Financial Strength
If you have a reasonable monthly surplus, then you can earn lower rates and subsequently, lower payments on your credit cards. You simply have to show your creditors how much of a good customer you are.
Overpaying on a credit card account for consecutive months can increase your chances of negotiating a lower rate and resulting lower payment directly with your credit card issuer. Showing a permanent ability to rapidly pay down on an account month after month can help you quickly restore your count to a preferred status, with lower interest rates and a much lower monthly payment.
Gain Need-Based Approval
Having extra money to send in is a nice luxury; a luxury that most people who are in debt do not have. Difficultities experienced in making minimum payments can harm your credit rating and further increase your monthly payments well beyond your ability to meet such payments.
When you only have one account, then you can appeal for hardship approval directly from that credit card issuer. This could give you 6 months to get back on track and pay down the balance. After that, your rates and payments can go back up. Hardships are difficult to gain approval for and they require a proven interruption in income or a dramatic jump in expenses that is only temporary in nature.
Having multiple accounts or needing more than 6 months to pay down the balance means that you will likely need some assistance through credit counseling before matters get worse. Their debt management programs are highly effective in rolling back your interest and lowering your monthly payments so that you can repay debt faster with more breathing room each month.
With a debt management program, most clients see a substantial reduction in their total credit card payments. In addition, modern credit counseling organizations provide automatic payment (ACH) services so that you can make a single consolidated payment each month.
If you are serious about taking control of your financial situation and need help from a nonprofit organization that you can trust, make a decision to receive credit counseling today. You can find out if you will likely qualify for benefits such as lower payments and lower interest rates. Additionally, you can normally receive a quote of a new payment during your credit counseling session.
If you do not qualify for a debt management program, you can still get the information you need and benefit from an action plan developed with your counselor. You do not have to be stuck with high monthly payments forever!
This entry was posted on Wednesday, November 19th, 2008 at 5:11 am and is filed under Credit Cards, Debt Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
April 25th, 2009 at 12:21 pm
I have been speaking to a counselor at Money Management International who is telling me that, under a Debt Management Plan, creditors will not reduce the monthly payment amount, just the interest rate in order to facilitate faster pay-offs. That doesn’t sound right to me, and contradicts what is stated in this article: “Their debt management programs are highly effective in rolling back your interest and lowering your monthly payments so that you can repay debt faster with more breathing room each month.”
Although all of our payments are current right now, we cannot really afford our current minimum payments. We are looking for a program that will result in lower interest rates and lower monthly payments. We do not expect any creditor to write off any debt – we just need some breathing room. Any suggestions?
April 27th, 2009 at 9:03 am
Dear Sonya:
Debt management plans are made possible by the creditors that participate in these programs. Each creditor provides a certain set of benefits. There are many creditors that do not reduce the payment or interest, and there are even some that generally require an even higher percentage due each month (although this is becoming less common).
If your quoted debt management plan payment is not lower than what you are currently paying, then you are likely in a scenario in which you are already receiving the lowest minimum payment requirement from your creditors based on the amount of debt that you have. This can be common for some of the best credit card customers, where the creditor rewards them with the lowest minimum payment calculation possible. Most people who qualify for the program are able to see a reduction in their monthly payments. If you are already receiving the preferred lower payment requirement, then it is true that your minimum payments likely would not drop any further through a debt management program. Your minimum payments are probably already lower than most of their other cardholders.
Your counselor at MMI will likely discuss methods for helping you reduce expenses and find new sources of income. While overtime is probably not an option right now, a seasonal part-time job might give you enough extra cash to pay down one of your accounts, thereby lowering your total monthly payments. Selling unneeded assets could be a very good option, since it may be done without a change in lifestyle. Yard sales and online auctions are possible ways to accomplish this.
Whatever you decide, please steer clear of debt settlement companies that may lure you in with the “promise of a lower payment.” Legitimate nonprofit credit counseling organizations like MMI will help you find the best option and support your decision, while for-profit debt settlement companies will ruin your credit, put you deeper in debt and fail to protect you from legal action.