4 ways to shorten lengthy credit card payoff

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

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Question for the CreditCards.com expert

Dear To Her Credit,
Like many people, we have several credit cards that we are not using anymore. We are trying to pay more than the minimum to get rid of them.

We have one card from Beneficial that we had used for remodeling that's considered a "revolving credit" card. Beneficial sold out to Bank of America and the interest rate is now 21.9 percent. Our balance is about $13,000. To top it off, the card is unusable from their sell-out , and they lowered our credit limit to lower than what we owe!

Our minimum payment on this account is $300. We don't know what to do. The balance only goes down $40 each month and at this rate, we'll die with it. I called to try to work out a lower interest, and they said absolutely no. Do we have any other options?  -- Debbie

Answer for the CreditCards.com expert

Dear Debbie,
You won't die with the debt if you keep paying just the minimum -- but it may just feel like it. At your current rate, it will take you more than seven years to pay it off, and by then you will have paid another $13,000-plus in interest!

To get rid of that debt, you've got to get the interest rate down and your monthly payments up.

Use this tool to calculate how changes in your interest rate and monthly can help you get rid of that debt -- the credit card payoff calculator.

Using the calculator, you can see that with your current interest rate and payment, you're in for this scenario:

Interest rate Balance Monthly payment Months to pay offInterest charges
21.99% $13,000 300 88 $13,108

What if you could add just $2 per day -- $60 per month -- to your payment? You'd save $4,500 in total interest and be done 28 months sooner.

Interest rate Balance Monthly payment Months to pay offInterest charges
21.99% $13,000 360 60

Better yet, find a lower interest rate and pay $2 per day more on your balance, and cut your interest charges by more than two-thirds!

Interest rate Balance Monthly payment Months to pay offInterest charges
12.99% $13,000 360 47 $3,577

Keep using the tool to determine how quickly you'd like to pay off your remodeling debt. It's amazing and motivating to see how small changes can make such a big difference.

Next, work on that high interest rate. When calling the bank doesn't help, write a letter asking for a rate reduction. It's harder now to get the rate down than it was a year or two ago, but it doesn't hurt to ask.

If they still say no, look for credit elsewhere. Balance transfer cards are still being advertised, even if they're not as easy to get as they used to be. Read "5 new rules in the credit card balance transfer game" before you look for the best balance transfer deal.

Be careful of balance transfer fees. They can quickly outweigh the advantages of the transfer if you're not careful.

If you find too many fees and less-than-tempting interest rates on balance transfer credit cards, consider a regular low interest credit card and a do-it-yourself transfer. Instead of directly transferring your balance to the new card, use your new card to pay monthly expenses. Send all the cash you would have spent to pay down principal on the higher rate card. (Don't miss the second step, or you'll be much worse off than when you started!)

Finally, find money you can use to increase your monthly payment. Two dollars a day, as in our example, shouldn't be that hard to find. If you go out for lunch, drink water and skip the appetizers. Eat beans once a week. Get your movies and books from the library. Grocery shop with a list. Sell something on Craigslist.com. Do some moonlighting.

You'll enjoy your remodeled home a lot more if you're not still paying on it seven years from now. Good luck paying it off much more quickly, and take care of your credit!

See related: 5 new rules in the balance transfer credit card balance transfer game, Options for dealing with a minimum payment increase, Minimum payments mean maximum trouble with debt

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Updated: 03-23-2019