How do you go about paying off your high interest rate obligations?

Make Extra Payments: One solution is to keep making the minimum payments due on all of your credit cards and mailing in extra payments to the credit card providers that are charging you high rates of interest. On these additional payments, clearly mark on your check and accompanying materials that “this payment is to be credited to my outstanding cash advance balance” (or whichever high interest rate balance you are attempting to pay down or retire). Check to make sure each payment is appropriately credited to the right high interest rate obligation. Then, after you have paid off one high rate balance, start paying on your next highest rate balance.

Transfer to Lower Rate Cards: Another possible solution is to transfer balances to lower interest rate cards. Many Americans are deluged with offers from competing credit card companies offering special promotional rates if you transfer your existing balances from one credit card company to another. Even though many of these promotional rates are effective for a limited period of time, this might buy you some time and cut your interest costs until you can find the money to repay the obligation. Several of these offers guarantee that the promotional interest rate will apply until you pay off the amount of the balance transfer. In such cases, you may simply be able to write yourself a lower interest rate loan up to your available credit limit.

Betsy has been using the convenience checks that her credit card company has been sending her. She did not realize that these checks were treated like cash advances, were at high interest rates, and had additional surcharges.

When transferring balances from one credit card to another, it is usually best to call the credit card company you wish to transfer your balance to and have them make the payment directly to the other credit card company. Since this may take several days or weeks to accomplish, make sure to keep making your minimum monthly payments until the transaction is completed. Also, be aware that some card issuers charge cash advance fees and assess charges on the convenience checks they often mail to their customers. Once such charges are added to the cost, those handy little convenience checks may not be so convenient after all.

Lower Rate Loans: Other repayment options might include obtaining a lower interest rate bill consolidation loan or taking out a home equity loan to pay off your outstanding high rate credit card balances. While such steps can save you money in the long-run, most people need to be careful not to run their credit card balances back up after credit line availability is restored due to payment with such loans.