Eliminate Debt Central

Probably one of the most common questions I get these days, other than “how do I eliminate my credit card debt?”  is this: “How can I lower my credit card payments?”  Pretty much everyone carrying a balance on their credit cards could benefit from knowing the answer to this very question.

Not suprisingly, most people simply accept whatever payment the credit card companies sock them with, and do not even realize it may be possible to get a lower monthly payment.  However, if you are in debt, a lower minimum payment might not neccessarily be the answer you need.  

High Interest Rates = High Minimum Payments

If you have had your APR’s (or interest rates) raised, or if you have just always had high rates, it could be one reason that your minimum payment is high.  

About 2 years ago, most credit card companies were forced to change the way they calculate your minimum payments.  Many creditors simply calculated your minimum due as a percentage (usually 2 or 2.2 percent) of your balance, regardless of your finance charges.

The problem with this method was that, if your interest was really high, your minimum payment may not have even covered your monthly finance charges.  So if you made only your minimum payment, the principal amount that you owe would actually have gone up!

To fix this problem, at the urging of the Office of the Comptroller of the Currency, the creditors changed the way your payments were calculated.  Now, most lenders determine your monthly payment as your finance charges for the month, plus any fees, plus a percentage (usually around 1 percent) of your average daily balance.  

In other words, if your interest rates were high, there is a very good chance your monthly payment went up a lot!  Many people saw their minimums double or more!  

How to Get Lower Monthly Payments

So, how can you get those pesky payments lowered?  One answer is to get a  lower interest rate!  This may sound difficult to do, but it is possible whether your credit is good or bad.  Check out this article on how to lower your credit card interest.

If you have good credit, another possible option to get a lower payment is to transfer your balances to a card with a better rate.  You could also consolidate your credit cards with an unsecured loan or with a home equity loan or line of credit.  

Each of these methods will have advantages and disadvantages, so be sure to carefully research your options.  Another factor to consider is that lower minimum payments may not be what you need.  If you are carrying high balances and paying a lot in finance charges, it is important to come up with a plan to get out of debt.  Lower credit card payments may help in the short term, but your long term goal should always be to completely eliminate your debt.

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