How to Reduce Minimum Payments on Credit Cards

The average amount of credit card debt is nearly $16,000 per household as of August 2011, according to CreditCard.com. Reducing or eliminating your credit card debt can help you secure lower interest rates on loans, improve your credit score and give you peace of mind. Many people struggle to pay minimum payments and in turn, rack up interest charges and late fees. There are steps to make you pay off your credit cards as soon as possible.

Instructions

1

Get a lower interest rate. You may be able to negotiate a lower interest rate with your credit card company. Before you attempt this, make a few higher than minimum payments in a row to prove you are in good financial standing. Do not be late with any payments. If your credit card company will not negotiate a lower rate, try shopping around with other companies for lower rates. You can then transfer your balance to a new credit card, but be aware of high balance transfer fees.

2

Apply for a debt consolidation loan. A debt consolidation loan is ideal to pay off moderate amounts of debt, usually not more than a few thousand dollars. These unsecured loans can provide you a lower interest rate than your credit card. Ideally, these loans should be paid off in a fairly short amount of time. To qualify for a debt consolidation loan, you should have a good credit score and be able to provide proof of steady income.

3

Apply for a home equity loan. Assuming you have a good amount of equity in your home, a home equity loan can be a good choice to pay off your credit card debt, especially if it is a relatively high amount. Typically, the payments and interest rates are much lower for home equity loans than for credit cards. You must be in overall good financial standing to qualify for a home equity loan.

4

Seek credit counseling. If you have poor credit, lack sufficient income or simply cannot make your minimum payments, seek a credit counselor. A credit counselor can help you devise a debt management plan based on your budget. The counselor can help you consolidate your minimum payments into one lump sum you will pay each month. Typically, this amount is between 10 and 60 percent lower than the combination of minimum payments you were paying previously.