How To Get Out Of
Credit Card Debt
This is the true story of how I got out of debt fast!
It was very obvious by now that I needed to supplement my income so I took a part time job in addition to
running my business. Additionally, I cut out any unnecessary expenses and even cancelled my cable television for
almost a year. With the extra money I focused 100% on paying down the 24.99% interest rate card. The balance on
that one was less than $5000 so it only took about 7 months. I will never forget the day that I completed the
last payment and saw a $0 balance, it was fantastic! Ironically just before making the last payment I received
a balance transfer offer from them for 6 months at 0% or 4.99% fixed for the life of the loan. It was at
that point that I was truly jumping for joy! I had never been so excited to get a credit card offer in
I waited for my last payment to clear and then took them up on their balance
transfer offer. Back then if I had used the transfer before my balance was gone, my payment would've
gone toward my 4.99% balance instead of the 24.99% balance. This has since been changed as part of the 2009
banking reform act.
Now My Debt
Reduction Started Going Fast!
After that initial high interest credit card was completely paid off I used the balance transfer to move $7000
from the next highest interest rate with was 21.00% over to 4.99% for the life of the loan., That single
transaction saved me about $1190 of interest per year that I could now apply to principal. It was hilarious that
the same institution that was charging me 24.99% a couple weeks earlier was now charging me 4.99% on a larger
After the transfer I had just under $3000 left at the 21.99% rate, so that was my focus for my next monthly
payments. With the $100 per month interest savings I was now realizing, I could make bigger payments and I
felt as though I was on the road back to solvency. My business improved so I was able to get rid of my part
time job a couple months later. I kept my expenses very low and took every spare dollar to pay off the second
credit card. This time it took about 5 months and once again upon paying it off I received another balance transfer
offer. This one wasn't for a fixed rate like the other but was at 0% for 10 months. I decided to use this offer to
transfer $8500 from my third credit card (which had a huge balance of $18,000) and was at a rate
of 18.99%. After this transaction I would save about $1345 in the next 10 months in exchange for a $50
balance transfer fee. Not Bad! That created an extra $130 per month that I could apply
to paying down the loan instead of interest charges!
My Debt Payoff
Accelerates Even Faster!
As a result of those two transactions I was redirecting about $2700 to paying down the balances instead of
wasting it on interest. Eventually the 3rd credit card company noticed how quickly I was paying down my balance
they sent me a notice that my APR was dropping from 18.99% all the way down to 7.99%.
At that point, the highest rate I had outstanding was 7.99% and the amount of interest I was paying had dropped
by over 80%. In the following year I was able to finish paying down my credit card debts and breathe a sigh of
relief. Even though I finished this process almost 7 years ago, I still can feel how desperate I was in June 2000.
It was a feeling that I hope I never have to experience again.
Pay Off Debt Instead Of Consolidating!
Debt consolidation has become big business and usually keeps people strapped into a
lifetime of interest charges. Back in 2000 I didn't own a home, otherwise I know I would've used the equity to
consolidate my credit card debt instead of paying them off. After all, that's how the
$40,000 business loan had come into existence. Spend consolidate then spend & consolidate....
it's a big trap!
By having no options to consolidate my debts it was actually a blessing. It forced me to recognize the fact
that thousands of dollars of my income was going to interest charges each year. That's money that should'v
been going to wealth accumulation instead.
Credit Cards Are Very Useful Tool If Used Properly!
After this challenging experience, you might think that I would cut up my credit cards and never use them again
but that's not the case. Right now I have roughly $15,000 from my business loan sitting on credit cards at an
average interest rate of only 2%. This is 75% less than what the bank was charging me for the loan!
I always use the balance transfer options whenever I experience a short term dip in cashflow or make a
large purchase that is under $10,000. Now that my excellent credit is reestablished and my credit score is above
800 I always have excellent rate offers to choose from. Capital One just gave me another offer for up to $12,000
for the next 12 months at 0% with a 2% transfer fee. I guarantee that is an offer I will never get from my local
In my humble opinion I think everyone should have at least 3 credit cards from different institutions with
credit lines of $5000 or more. By having access to those lines you can get through short term financial crisis
without much pain. Once the storm passes you can simply balance transfer your way back to prosperity. The best
time to apply for them is when you don't need them. Had I not had credit cards from 3 different companies, I would
probably still be trying to dig myself out. It would've been almost impossible with those high interest rates I was
If you have poor credit, you may want to learn how to improve your credit score. It will make more
difference than anything else you can possibly do in the financial arena,
This is one major item in determining your credit score, don't let your credit cards get near their limit. In
fact, try to keep from using more than about 30% of the credit that is available. They measure how much you
are using compared to how much you have available. The larger the gap is between what you have and what you use,
the higher your credit score will generally be.
The other major factor to keep a good credit score is to ALWAYS make timely payments. Delayed or late payments
are viewed as a sign of credit problems whether it's true or not!