Hello Terry. I have multiple cards and can only afford to make the minimum payment on each one. I’m considering either transferring the balances to a single card or possibly taking out a loan to pay off the balances. A few of the lending copies I’ve inquired about (prosper, avant etc) offer a lower rate than the APR on my cards and they provide 3-5 year timetables.

Based on this information, which option do you think is best? I like the latter option because I know exactly how long it will take to pay off the balance. Please let me know your thoughts.

Thanks in advance for your time.

Terry Says:  There is a simple law of holes that applies here:  When you’re in a deep hole, stop digging!  I’m not trying to be flippant.  Let me repeat the secret to paying down the balance on a credit card:  Take the current minimum monthly payment, and double it. Write that number down.  Pay that amount every month (even though the new minimum may be lower).  Don’t charge another penny.  Your card will be paid off in less than three years.

That’s the principle.  Getting a lower rate is just fooling yourself. It helps keep the balance from growing so fast, but it doesn’t pay it down for you.  Perhaps you can roll a balance to a card that charges a zero interest rate for at least a year.  You can do that if your credit is good.  Check out the “balance transfer” offers at Bankrate.com.  But you still need to pay more than the minimum, or you will be paying for years.

So the real question is:  Can you figure out a way to earn enough extra money each month to make that “double the minimum” payment?  Think outside the box — it doesn’t have to mean extra hours at your job.  It could mean a second job entirely outside your career — If you’re in sales, try being a waiter or waitress, or babysit, or walk dogs — anything to earn extra money and get out from under the burden of this debt.  Do it one card at a time.  But even at low rates, paying only the minimum each month is just digging yourself a deeper hole!

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