UPDATE: Getting Out of Credit Card Debt

T’is a pity for the flower of youth to be wrinkled by the radioactive belch of credit card debt. Yesterday, we asked the readers about how college boy L.S. should get out of his $2150 in credit card debt set at exorbitant rates and here’s what we think he should do.

First, cut up the cards. Adopting a “cash on the barrelhead,” and “If I can’t buy it, I don’t need it” policy early in life will get you far. Maybe not behind the wheel of Ferrari but at least not under its wheel after throwing yourself in front to escape the vertiginous spiral of collection agencies.

Secondly, find a way to dig the seed of this debt wart out by the roots. Ask for parents to pay off debt with a zero interest loan. If they say no, get a student loan for the amount necessary. Either way, the interest will be cheaper. Ask around the student financial aid office. At our college, they gave a $2500 “laptop” loan very easily. There should at least be Stafford loans readily available.

These sound preferable to the CapitolOne “Smartswitch” program you were asking about as they deal with the essential problem (debt at high interest rates) instead of just passing your ankles around.


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  1. Ben Popken says:

    Michael writes:

    Step 1 Make this Credit Less Crappy:
    Call up the CC and ask them to lower your rate. Believe it or not, that sometimes works. Don’t beg, just ask. If the first CSR says no, try a couple more times. Look to see if the same company offers other cards. If you get your balences below 80 or 40%, they’ll switch you sometimes.

    Step 2 Get different credit from a non-revolving source:
    Student loans are rediculously easy to get. Get one. Use that. Cut up these cards (but don’t close the lines unless they have an annual fee) after you do so. Having credit for a long time is a sign that other people should give you credit.

    Step 3 Don’t get another credit card until you can qualify for a good one. Just stop using cards 1 and 2. Pay them off. Let the lines sit.

    After about 18 months (if you didn’t have any bad items on your report for that period), you’ll get offers for halfway decent ones, like Amex Blue. It will take longer if you have late payments, etc. 24-48 months are more reasonable amounts of time then.

    If you fail at the above, look to the bottom:

    While the idea you’re going to pay off CC’s every month is a noble one, it’s not realistic for many people. More responsible types say what they may, but there is something to say for being stupid in the right way rather than being stupid in a really stupid way.

    So what people who can’t help but carry a balence need to do is different. You need to qualify for a gold card. You do this by keeping your crappy card for awhile, allow your credit to repair, and keep your balance at 0.

    Then after a couple years, your credit will often be good enough to qualify. For instance, there is a gold card in Missouri I believe that has something like 8.125 fixed rate. This is by far the “gold standard”, but you’ll find other gold cards with similar rates, at worse in the low 10%’s. I suggest fixed with a slightly higher rate over adjustable.

    Platinum cards are not like gold cards at all. They are a trick of credit card companies to make people think “Oooh, better than gold”. If you carry balences on your cards, you want a gold card. If you don’t carry balences, you want a rewards card.

    My rule of thumb. If you don’t know what you want to spend on stuff each month, and you don’t have an easy way to track your spending (like quicken or moneydance), you probably shouldn’t try to use the credit card all the time as a cash proxy.”

  2. thrillhouse says:

    what a mess of advice – stop worrying about your credit score, because you don’t need it. A high credit score means you love debt, you’re willing to stay in it, and you want more. You don’t need it, L.S.

    Pay these off, shred them and then shred every single other credit card off that comes in the mail. I don’t care what color they make them in now – blue, gold, platnum, purple or pink – its all crap.

    The key that everyone is forgetting is that you must change your habbits – draw the line in the sand and stop borrowing money. Start paying yourself payments first and put together an emergency fund, so that when emergencies come – and they will – you won’t need this stupid trap called credit.

  3. Ben Popken says:

    JP writes:

    “I am almost 100% sure that the terms of student loans, especially Stafford loans (since they’re federal), stipulate that you can’t use the procedes from the loan for paying off credit cards. Of course, there are ways to work around such a limitation, and it’s only illegal if you get caught, but it’s worth the mention.”