4 Strategies for Handling Consumer Debt

Debt: it’s an ugly four-letter word.

According to a study by MagnifyMoney.com, almost half of Americans carry credit card debt with an average of $10,000.  $10,000 of credit card debt can cost thousands and thousands of additional dollars in interest. But, instead of simply throwing away money in the form of interest payments to the credit card lender, there are repayment strategies available to help those carrying debt slash the interest. Here are four empowering strategies:

1. Request a reduction of your interest rate

Many personal finance experts recommend giving your lender a call to negotiate the interest on your credit card debt. As banks hold most of the power in your financial relationship they aren’t likely to give you much wiggle room when it comes to reducing interest rates on debt.  Banks are always on the hunt to acquire new customers, so the best deals are given to the “acquisitions.” In order to compensate for giving great deals to the new clients, banks will raise prices on existing customers.

So, the worst case is that they’ll do nothing. That being said, the best-case scenario is that your bank might drop your interest rate by two percent.

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6 comments on “4 Strategies for Handling Consumer Debt
  1. Don’t forget that you can help yourself out just by selling some stuff around the house and putting it towards your debt. You’ll lower your debt and cut out some of that terrible interest you’d be paying.

    • Broke Millennial says:

      True, but I wanted to focus on the practical applications of financial products like balance transfers and personal loans. Never a bad idea to try to be making more money to put towards your debt though!

  2. Great tips! Thank god for balance transfers otherwise it would be taking me 5 YEARS to pay off my credit card debt instead of the projected 2 years I have now.
    Victoria @thefrugaltrial recently posted…September Debt RepaymentMy Profile

  3. Simon E. says:

    Excellent ideas Eric. It always suprises me what you can get by simply asking! And it doesn’t cost a thing, just you picking up the phone and dialing 🙂
    And yes, there is certainly need for a strategy to stay out of debt. It’d be no use transferring to a 0% interest rate card only to accumulate even more debt.
    If everything else fails…its time to call in the professionals.
    Simon E. recently posted…Travelocity Rewards American Express Card ReviewMy Profile

  4. When I could not pay my so-long overdue credit card bill, the bank decided that I should pay only the amount I spent in the credit card plus 10% interest. It was really hard to pay that I had to give my expenses info to the bank so we ended up with that last resort.
    Jayson @ Monster Piggy Bank recently posted…Why I like to average down on sharesMy Profile

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