Credit cards themselves can be a lifesaver when a financial emergency arises. Unfortunately, sometimes a credit card balance grows so high that you cannot make the minimum payments, especially if you have several credit cards that are maxed out. This can be scary to think about, but the good news is that even if you are behind on your credit card payments there are four options that may help you resolve this problem a productive manner.
Option one: Open a new card and transfer the balance
A balance transfer is one option some choose to pay down credit card debt. If your credit card has a high interest rate it may be possible for you to open a new credit card with a low interest rate and transfer the balance on your old card to the new card. This can be a means of addressing your high-interest credit card debt in a way that allows you to work on the balance. Note that oftentimes you only have so long to enjoy 0% interest on the new card before interest kicks in.
Option two: The debt avalanche strategy
The debt avalanche strategy is another way to address overwhelming credit card debt. Under the debt avalanche strategy, you start paying as much as you can to the credit card with the highest interest rate and pay the minimum balances on your other debts. Once the highest interest credit card is paid off you start paying off the credit card with the next highest interest rate in the same manner. This strategy can save you money in the long run.
Option three: The debt snowball strategy
The debt snowball strategy is somewhat the opposite of the debt avalanche strategy. Under the debt snowball strategy, you start paying as much as you can to the credit card with the lowest balance first and pay the minimum balances on your other debts. Following that you pay off the credit card with the second lowest balance. The idea is that you will use the money saved from paying off the previous credit card to put towards paying off the credit card with the second highest balance and so on.
Option four: File for bankruptcy
Filing for bankruptcy has an undeserved negative stigma. The truth is that filing for Chapter 7 and Chapter 13 bankruptcy is a responsible way to address debts that you would never be able to pay back. If you choose to file for bankruptcy you will want to make sure you seek the help you need to take advantage of all the benefits bankruptcy offers.