I got my first student credit card in college, and at the time I thought to myself how great it would be to have one and I promised myself I would be responsible with it and pay off by debt every month no matter what. I got a Discover More Card so I could take advantage of the cash back that I get for paying the balance off. Made sense right? It did at the time but I just took it and ran up a $20,000 balance faster than you would believe, and all at a high interest rate too. I was trapped by credit card debt and was struggling to pay bills, so I needed to do something and fast. The good news is that as I write this I am out of credit card debt and it feels great. So how did I beat my credit card debt?
First, my interest rates were WAY too high. I never missed a payment entirely but I was late a few times and I was sitting at a 29.99% interest rate…ouch. Kind of hard to pay off your $20K balance when the credit card company keeps adding on an additional 1/3 every year right? The first thing I did was sign up for one of those 0% balance transfer credit card offers that I had been throwing out for years, took the 4% balance transfer hit, and started paying down principal only.
I knew since the 0% balance transfer had a limited time period on it that I had to move fast to pay down as much as I could. I started saving as much as I could throughout the month so that I could put it all on the card. This meant no new shoes (I went about 6 months with shoes with a hole in the bottom… not fun when I stepped in puddles), no cup of coffee on the way to work (I made it at home) and I started making meals instead of dining out. I also received a big tax return of around $4,000 and every single dollar went to the credit card balance.
When the six months were up I still wasn’t done paying off my balance, but at that point I did have a large amount paid off. The rate jumped up to 17.99%, which isn’t horrible as interest rates go these days but it isn’t good either. I called the credit card company, told them what I was trying to do and pointed to all the large payments I had made as a sign of good faith. They lowered my interest rate to 11.99% with the condition that if I was late or missed a payment that it would jump back to 29.99%, I agreed and took on the new lower balance.
After that I continued to pay as much as possible on my card, cutting back wherever I could. Finally just last month I made my last credit card payment and let me tell you it was an amazing feeling to finally be free of that monkey off my back. I couldn’t believe all the extra money I had especially now that I had learned to live within my means… now I have thousands of dollars I can save, invest online, or maybe buy a new pair of shoes without holes (I did buy a new pair by the way). I guess the point of this whole story is that if you can stop spending, lower your balance and pay as much as you can towards your outstanding balance you can get out of credit card debt once and for all.