Debt repayment can be a hectic and complicated process. This is made worse when accompanied by interest charges like it happens with credit cards. Incurring a credit card debt and unfortunately suffer an unexpected financial dent is a common phenomenon. When this happens, you can manage the little you have to enable you to settle your debt. You can do this by downsizing your budget, negotiating with the creditors, etc. Now, what if you don’t have any money? All is not lost too. There are a variety of tricks you can employ to pay your credit card debt and be on good books when you have no money. Below are a number of these techniques in depth;
Ways to Pay Off Credit Card Debt When You Have No money
File for Chapter 7 Bankruptcy
If you are sure that you cannot raise the funds to pay your debt, then this may be the time you accept a new beginning. Although it may not be all the debt, Chapter 7 Bankruptcy can discharge some of your credit card debts. When you file a bankruptcy petition; collections activities are ordered to stop immediately. However, this does not eliminate secured debts. It only allows discharge of unsecured debt of which Credit card debts are one of them.
When you file for Chapter 7 bankruptcy, you will have to take a means test. This is meant to determine the eligibility of the information you are giving. The test will look at your income and your household size. It will then compare this with the state standards of income.
Chapter 7 Bankruptcy takes less than six months. You need to meet your credit counselor at least 6 months before filing for bankruptcy. You can meet with a bankruptcy attorney if you have a valuable property, confusing case, and hate paper. When you get ready to file bankruptcy, visit Upslope’s website app and file for it.
Although bankruptcy is a way of solving credit card debt, all your credit cards will be canceled. Also, your credit reports will bear the bankruptcy status for 7-10 years. So, you’ll have to spend years rebuilding your credit score.
Balance Transfer Cards
Bank transfer cards help you move the balance of one credit card to another credit card. This happens in cases where your creditor has refused to give you lower interest rates. When you transfer your cash, you will effectively pay your outstanding balance. These cards have a big benefit as the banks give you a promotion as incentive to access your business.
Additionally, during this period, you do not pay any interest. Many of these credit cards come with 0% intro APR up to one year. This helps avoid accumulation of interest which you would otherwise be paying.
How does this work? You are supposed to transfer your debt to another card with 0% interest. To qualify for a 0% credit card, should have a credit score of 740 and above. If your credit score is within that range, the government entices you with offers. You may be rewarded with reward points, travel points, and cash backs.
Check Balance Transfer Fee Details
Promotional or Intro period: Promotional period is a time when low-interest-rate offered to your credit card balance is applicable. This may be 3 or 18 months. Over this time, you enjoy a 0% interest rate. Additionally, during the intro period, they do not charge you a high-interest rate. You should take advantage of this period to clear your debt before it elapses. The only challenge therein is paying the new debt before the interest rate goes up using the card transfer for a debt consolidation loan.
Balance transfer limit: Your credit limit determines your balance transfer. Something to note is that the balance transfer limit does not affect your credit score. You should always check the terms on the balance transfer card offer. This is where you can find your transfer limit information.
Time limit to transfer: The time to transfer your debt is between 30-60 days with 0% or special low-interest charge. After this period, the interest rates go higher. When you are given the balance transfer card, make sure you act before the elapse of this period.
Transfer fee: They are common to most balance transfer cards. The transfer fee is part of the balance transfer limit.
APR: This is the annual percentage interest rate on your credit card. There are intro APR and regular APR. You are charged on a monthly basis and addition to the balance fee but the rate is yearly. The intro APR can be canceled if due to late payment. When your into APR cancellation happens, the regular APR kicks. This may apply to all new purchases.
Annual fee: This is the amount charged annually for using the balance transfer card. The average annual fee is $80 as per the CFPB reports. The fee is recurring each year you are using the card. Billions of dollars were paid to creditors from the annual fees.
Credit card issuer: This is either the bank or credit union which gives the credit card to the end-user. In most cases, you may be unable to transfer the debt if you want to transfer debt from the same company offering the 0% transfer rate.
Check for credit check: Mostly, the 0% transfer is on the new credit check.
Cash advances: You should be careful on the check not to count as cash advances if your 0% transfer offers checks. This is because you may get yourself in higher interest if it counts as a cash advance.
Late payments, overages, and penalties: Be careful on your card’s due dates as these may attract penalty. You may accrue higher interest rates due to your late payment. And this can easily end your promotional rate. This will attract higher interests which may be overwhelming to you. Additionally, people who have low credit scores will obviously have higher fees. As per the CARD Act, fees were limited to $26 and $28 for the first late fee and second late fee respectively.
How Do I Transfer Funds?
There are various ways you can use balance transfer credit cards to transfer your cash to the creditor. These include checks, websites, apps, phones, or direct deposits. You can receive a checkbook with paper checks from the credit card issuer. They will then explain to you how you can make checks to the company you want to pay the debt to. If you have an online account, you can visit their website and login into your account. After this, you will transfer your debt to a new balance card. All these are platforms that you can use to access your information so that you transfer your debts. You can also use your phone. Different balance card companies have various options where you can directly deposit from a Bank account. Therefore, you shouldn’t feel limited in terms of the channels to use when making your payments.
There are several debt management agencies you can consult if you don’t want to do it on your own. Such agencies help to eliminate the interest rates on your credit card debt. They are usually nonprofit credit agencies. Their main purpose is to talk with your creditors to make sure that they consolidate your debts. They will also work towards lowering your interest rates and setting up a payment scheme on your behalf. A data management plan will help in batching your monthly payments from your credit cards to one payment done on a monthly basis. The payment is always at reduced rates.
The first step you should take is to approach a certified credit counselor. All credible counselors are certified by the National Foundation for Credit Counseling (NFCC). NFCC makes sure that the counselor you have has financial management training and is following the law when doing that. In most cases, the counseling session is free. The fee payments start when you decide to enroll in a Data Management Plan (DMP). You are supposed to be informed of the fees upfront before you start. This is a mandatory requirement as per the consumer laws. Although every company has its own pricing scale; most likely a monthly fee between $20 to 70$ and a setup fee around $30 to 50$. The set-up fee is a one-time payment.
We have two types of debts, secured and unsecured. Secured debt is where you have a loan but you secured it with a car, home, or even land. Unsecured debts do not have a compensation way should you fail to pay the loan. DMP cannot help you to settle like home mortgages, car loans, and federal student loans among other secured loans.
After a successful negotiation between your creditors and DMP agents, you will now make payments in a lump sum to the DMP. This is done according to the agreement you make with the agency. The agency then makes the payment by distributing it to all your creditors.
It is during this time when you should make sure that you have a budget. Do not assume your budget or do mental sums for the budget. Write it on paper and make sure you do not overspend and that you have remained within your personal budget. You can talk to your credit counselor and see if the Debt management program is suitable. During this period, your credit report indicates that you are participating in the Debt Management Plan. The credit report indicates you have paid your debt in full when you finish paying.
These are kind of consolidation loans which you can take to help you pay your credit card debt when you have no money. You should take such a loan only if you are sure that you will pay within the agreed time. It is advantageous when your credit score is an all-time high and you get 0% interest. For that to happen, you have to remain committed to paying each month. There is no magic to make your personal loan disappear. You will have to pay it.
Other Ways For Pay Off Credit Card Debt When You Have No Money
Ask Your Creditors for A Lower Interest Rate
One of the methods you can use to pay off credit card debt is asking your creditor to lower their interest. Your credit card issuer can lower interest rates to help you clear your debt fast. It is hard to make any progress in debt repayment when you have high-interest rates. This is because every payment you make will automatically go to interest charges. When your interest is lowered, definitely the monthly interest is lowered.
This will enable you to pay your debt fast. When you have a good credit score you will get more leverage towards winning the lower interest rates. Additionally, you will stand a better chance of getting lower interests if you have a positive payment history. When your credit card issuer denies lowering your interest, consider transferring your balance to a credit card with a lower interest rate. It is better when if you will take the advantage of a 0% balance transfer.
Cut Your Expenses To Help You Pay Credit Card Debt Fast
On many occasions, we have expenses that we do not need to have. All these expenses should be cut to help you raise funds to pay your debt. You should look at the expenditure evidence you have. Do not guess your budget. You should review your monthly bank statements to know how much you are spending. You should ask yourself whether the purchases you are making are worth it. Lastly, you should consider that every cost you are cutting doesn’t deny you luxury or a good life. The decision of lowering your expenses is temporary and is helping you to pay your credit card debt when you have no money. I would tell you it is a worthy goal. Such sacrifice you make of slashing your expenses you can add them back when you are free from debt. This is only if you will feel it is worth it.
Consider Consumer Credit Counseling
A credit counseling agency helps users to eliminate the interest rates on credit cards debt. In most cases we are pressed in life because we lack someone who can help us solve our problems. The credit counseling agency helps you to figure out any budget which includes debt payments every month. Credit counseling agencies have specialized credit counselors who can help when you are unable to raise your debt payments. The credit counselor helps you come up with a debt management plan (DMP) with your creditor. The developed debt management plan includes lowering of monthly payments to creditors. When you get the credit counselor, you can also be making one monthly payment to them then the credit agency will distribute your payment to each of your creditors.
Find an Additional Source of Income to Help You Pay Credit Card Debt Fast
Debts can really mess your living standard and personal investment growth. That is why you should work towards getting rid of them. Addition of another source of income is a very big mile towards clearing your debt. Actually, it is an excellent way of helping you get out of debts. However, sometimes it is not a feasible option. When you have an extra income source, you will no longer need a credit card to make your debt payments. Additionally, you will have more funds to help you clear your debt. Not everyone works all the days of the week. If you have credit card debt and you are asking yourself where to get a second job, then here are some of them. Jobs like freelancing, selling on eBay, starting a small business etc. can help earn an extra coin.
Nobody likes to be in debt. Many times, being in debt is very overwhelming especially the moments you are running on a low income. But the good news is that there is still hope to pay your credit card debt when you do not have money. The bare truth about getting out of debt is that you will need to make some hard decisions to help you get rid of the debt. After all, it is better to live a few years of limited resources and pay debts than to have a lifetime full of debts. Just choose one debt at a time and make progress of paying one at a time and you will be free one day.