How to Reduce Credit Card Payments Without Damaging Credit

When your minimum credit card payments are too high for you, do not just stop making the payments. This will lower your credit score when the credit card company reports the late payments. Enrolling in a debt management program or debt settlement program can also lower your credit score because the company might mismanage your debts and charges you fees that slow down your progress toward reducing your balances. Instead, try a few different ways to lower your monthly payment so you can keep up with it and maintain your credit history.

Instructions

1

Stop using the credit card. If you are making at least the minimum payment each month and are not adding any new charges to the card, your balance will gradually decrease, which in turn gradually decreases the amount of the minimum payment.

2

Call the credit card company phone number printed on the back of the card and ask for a lower interest rate. This helps lower the minimum payment because the credit card company sets the payment as the interest plus a fixed percentage of the balance. The interest portion of your payment will decrease if you have a lower interest rate.

3

Pay half of your credit card bill every two weeks. This helps you in three major ways. First, you pay less interest on the portion of your bill that you pay early because you don't let the interest accrue for the whole month. Second, you cut the bill in half so you can better manage your cash flow out of each bi-weekly paycheck. Third, you make 26 half-payments per year, which is equivalent to 13 full payments. This one extra payment helps you reduce your balance faster and pay less interest, which lowers your minimum payments.

4

Open a new card with a zero percent or other low interest rate for balance transfers. Transfer the balance to this card. Opening the new credit card will slightly lower your credit score, but you should bounce back quickly because you will be reducing the balance much faster than you could if you had to pay interest.

5

Open a home equity loan or personal loan and use the proceeds to pay off the credit card. Opening the loan will slightly lower your credit score, but paying off the credit card in full will probably increase your credit score by about the same amount. This is because your credit score penalizes you for using a high percentage of your available credit on credit cards. Between getting a lower interest rate and a long repayment term on the loan, you can significantly lower your monthly payments.