1. Pay at least the minimum on each debt
Each month, pay off as much of your debt as you can. At least pay the minimum you owe on each loan. This will protect your credit rating. If you can afford to pay more, pay down the loan with the highest interest rate first. As you pay off each loan, start paying more on the next debt in line.
2. Ask for a lower interest rate
Ask your lender for a lower rate. If the first person you talk to can’t help you, ask to speak to their supervisor. If you have a good record of paying on time, they may be willing to reduce your interest rate to keep your business.
3. Stop using your credit cards
You don’t have to cancel your credit cards or cut them up. But put them away somewhere safe and don’t use them to make any more purchases until you’ve cleared your debt.
4. Consider a consolidation loan
You may be able to reduce your interest charges by grouping all your debts into 1 low-interest loan. This works best if you stop accumulating debt while you pay off the consolidation loan. Two common options are a home-equity loan or line of credit. The interest rate will be lower, but keep in mind that you could lose your house if you don’t make the payments.
Find out how long it could take to pay off your credit cards and other debt with this debt calculator
5. Trim your budget
Could you cut back on things like eating out and other optional purchases? Trimming your budget will free up more money to pay down on your debt.
6. Talk to a professional
If you can’t figure out a way to reduce your debt, consider talking to a financial planner or credit counsellor. Non-profit credit agencies help people work through their debt problems. They can help you develop a plan, reduce your interest costs and get out of debt over time.
There may be times when repayment is impossible. In those cases, bankruptcy may be the only way out. But there are many drawbacks. For example, your credit record will contain this information for 6 years or more. Consider bankruptcy a last resort. And be sure to get expert advice