HOUSTON – With the cost of almost everything we buy skyrocketing over the past couple of years, it’s no surprise that credit card debt is soaring. The average credit card balance has jumped 46% in the last three years and many families are sinking deeper into debt.
KPRC 2 Investigator Bill Spencer has two ways to wipe out all of your credit card debt without paying a fortune in sky-high interest rates.
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Amber Canedo of Katy looks over her bills online. Amber actually works in the financial services industry, but like so many of us right now, even she fell into a canyon of credit card debt several years ago.
“Oh, we were about $29,000 in debt,” she said. “And that’s the thing, then when you look at it it’s just like, oh wow, there’s no way that I can personally just get out of this much debt. It’s really scary.”
Amber and her husband are not alone by any means. Ted Rossman, a credit expert with bankrate.com, says credit card debt now stands at a staggering $1.18 trillion in this country, with 49% of all credit card users carrying that debt month after month.
“It is scary, in total, Americans owe $1.18 trillion on their credit cards. and on an individual level, according to Trans Union, this works out to $6,360 per person,” he said. “Which means if you make minimum payments towards that average balance, you’re going to be in debt for more than 18 years.”
So, what’s the fastest, cheapest way to wipe out all that debt and not pay a fortune in interest?
“So my favorite tip is to sign up for a 0% balance transfer credit card. You can get a 0% balance transfer card for up to 21 months and good examples include the Wells Fargo Reflect, The Citi Simplicity and The US Bank Visa Platinum cards. All these are excellent cards to apply for to eliminate your debt without paying a fortune in interest.” Rossman said.
Okay, that’s all good, but once you get that card, how are you supposed to use it? Let’s say you’ve racked up $5,000 in credit card debt on five different credit cards.
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To wipe that all out, and not pay 20% interest or even higher over a number of years, you’re going to take that 5,000 bucks in debt and transfer it all onto one 21-month, 0% balance transfer card.
But the thing is, you’re going to have to pay a service fee of roughly $250 to the balance transfer card company to make that transfer happen.
So now, we’re going to add that $250 to your $5,000 in debt and we’re going to have a new debt total of $5,250.00.
Now, we take our total debt of $5,250.00 and divide that by 21 months and we come up with $250 that we are going to have to pay every month for 21 months. Meaning, that if we pay that $250 every month for the next 21 months, we’re going to completely wipe out our debt and we will have done it all by paying 0% interest on that balance transfer card.
In reality, we will have eliminated all that debt and paid zero interest doing it, that is if we stick with the plan.
But at almost $30,000 in debt, Amber and her husband needed a lot more help than digging themselves out, so they contacted a non-profit credit counseling agency, in this case Money Management International.
“They saved us,” Amber said. “The really crucial part for us was they reach out to all of your creditors, and they negotiate to lower your interest rates so that your debt can be paid off faster. Then they made it very easy, they worked with us to determine the amount that we could pay per month and got us on a payment plan that we could actually handle without failing.”
“We do work with creditors to knock down the interest rates and we put our clients on a realistic payment schedule that they can handle without being completely stressed out and without failing,” Thomas Nitsche of Money Management International said. “We also start out with small goals that can be achieved and give our clients hope that they can succeed. Once they see the plan working, it’s far easier to keep going. And on average they get out of that debt within four years.”
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And guess what? With Money Management International’s help, Amber and her husband Rob were able to wipe out their $30,000 in debt within three years.
“I really can’t recommend them enough, they helped us accomplish something that seemed almost impossible,” Amber said. “It is truly amazing that we are able to accomplish this and we’re really happy.”
One more important thing to remember, if you are going to seek out help from a credit counseling agency, make sure it’s a non-profit credit counseling agency.