Lyle D. Solomon, Principal Attorney at Oak View Law Group
Lyle Solomon is a licensed attorney, who has been affiliated with law firms in California, Nevada, and Arizona since 1991. As the principal attorney of Ovlg, he gives advice and writes articles to help people solve their debt problems.
Having an outstanding debt can give you sleepless nights. This is why many people use whatever means necessary to pay off their credit card debts. Most people go down the 'personal loan' route and use that money to pay off their outstanding credit card debts. But have you been thinking if you should use a personal loan to pay off your credit card debt? Is that the only option you have?
Personal Loans For Your Credit Card Debts
Personal loans usually have a lower interest rate, and this is why many people opt to take such loans. This way, they don't have to worry themselves with extensive credit card interests.
It makes sense to pay off your credit card debts with a personal loan if you have too many of them. However, if it is just one credit card, you should stick to paying off that debt exclusively. You might not know this, but your personal loans' monthly payments may be significantly greater than your credit card debt payments.
Personal loans usually have a fixed rate, which means that you have to make monthly payments for a decided time. If you think that by taking a personal loan you might be able to save up on your interest, you may be disregarding the fact that you will have to pay larger monthly payments. This difference automatically cancels out, or perhaps you might eventually end up paying more money for your personal loan.
Furthermore, a loan-origination’s fee can catch you off guard. To process your new loan, you may have to pay a loan origination fee typically somewhere near 6% or less. You do not have to pay the fee upfront, but it is included in the total amount of your loan. If you put two and two together, you will figure out that you will have to pay interest on the loan origination fee. However, there's more to it. If you end up paying your loan early, you might have an additional fee. The additional fee is called the prepayment penalty. This means that you eventually pay more money with a personal loan than you would have by simply paying off the credit debt.
Is there any other way?
Yes! You do not have to go through the hassle of getting a personal loan. Instead, you can learn how to negotiate credit card debt. If you wish to settle your credit card debt, you can get in touch with a third party company or do it on your own. In most cases, people who opt to do it themselves get a better credit card debt settlement.
How To Negotiate Credit Card Debt
It is not exactly easy to learn how to negotiate credit card debt on your own, but here are some tips that might help you:
Know the exact amount of debt you owe
Before you start the negotiation, you must know the exact amount you are negotiating for. You can either call the credit card company and inquire about the outstanding balance or check it on your own using the online portal. While you are at it, make sure to check your interest rate.
Look at your options
There are several types of settlements you can opt for. Look at the different types of settlements and decide which one would be the best option for you. If you cannot figure it out on your own, you must hire legal counsel, and they will be able to give you the best advice according to your situation.
Reach out to your credit card company
After deciding your game plan, you must reach out to your credit card company and ask them to give you an appointment with the concerned department. In this case, the concerned department might be the debt settlement or the hardship department. Talk to the concerned department and discuss your proposal with them.
Talk about your offer
Give the concerned department an outline of what you are aiming to do and negotiate with them. See what counter offers they present, and then try to make sure that you get the best out of the settlement. If you need any legal assistance, this is the best time to hire help.
Sign up an agreement
Getting written proof of all your documents is vital. If you and your credit card company agree on a settlement, ask them to draft an agreement so that you have all the proof you need.
Hopefully, this guide was sufficient to help you learn how to negotiate credit card debt. With the handy tips discussed in this piece, paying your debt off will become relatively simpler, ensuring y