Most people who carry a balance on their credit cards would love to have lower monthly payments.  For many, it is possible to get lower credit card payments but it may not always be in your best interest.

Before we jump into how to get those monthly minimums lowered, let’s first take a look at the drawbacks.  Paying the smallest possible amount on your credit card balances means you will take longer to pay it off, thus paying even more money in interest and staying in debt even longer.

So even though lower monthly payments may sound attractive to most people, it can be fool’s gold for everyone who want to get out of debt.

With that said, I do realize that some people are simply struggling to get by from month to month.  If you have already tracked your spending and made a budget, then you may realize that lowering your monthly costs could be the difference between you being solvent and you going further into debt every month.

If you find yourself in this position, getting lower payments on your credit cards can be a good temporary solution provided you have come up with a long term plan to get out of debt! If this applies to you, then read on.

For those of you who want to lower your payments so you will have more cash and a more comfortable lifestyle, I would recommend that you get help from an accredited credit counselor and DO NOT try to get your payments reduced until you do.

How to Lower Your Monthly Payments

• The first and most painless method is to call your credit card company and ask for a lower interest rate. If your rates are high, then your monthly finance charges are high.  Most credit card companies these days compute your minimum monthly payment by taking your finance charges for the month and adding that to a certain percentage of your balance (for example, 1% of balance + finance charges = minimum payment).  Therefore, lowering your interest means lowering your minimum payment.
  • This method is win-win, because less interest also means more of your money goes towards paying off principal, getting you out of debt faster.
  • This method is only available to those who have good credit scores.  If you have a history of late payments, or if you have relatively high balances, your probably won’t qualify for a lower interest rate.
  • Even if you have good credit, you may already have the lowest rate possible with your credit card company.  In that case, you are probably out of luck, and you may want to take a look at the second option below.
• You can get lower interest rates and lower payments by consolidating and/or transferring your balances.  Transferring to a lower rate card or loan will often result in a lower payment as well.  This can be accomplished with another credit card, an unsecured personal loan, or with a home equity loan.  Each of these methods come with their own various pros and cons.
  • This method also requires good credit and, for the home equity option, requires that you own and have positive equity in a home.
  • If you plan on playing the balance transfer game, you will need to do your homework and be very cautious in looking at the potential terms of your account. Make sure your low rates are permanent, not just temporary teaser rates. Even if you find what seems like a good deal, some creditors may suddenly change the terms of the agreement.
• You can lower your minimum payments with the help of a debt management plan.  This option is available though a credit counseling organization.  Be sure to look for a reputable agency with knowledgeable, accredited financial counselors.
  • This option is available to those who do not have great credit, and can be particularly useful for those who need some extra help with their debt and finances.
  • Some credit counseling agencies charge high fees and will pressure clients into a debt management plan regardless of the client’s needs.  Be sure to avoid agencies like this.
  • This is not the best option for people who have good credit and the ability to make real progress in paying off debt on their own.  However, if you are in a tight spot financially, it is better to look into this option before you get too deep in the hole, leaving you with fewer options.

If you are struggling every month and need a little breathing room, one of these options could give you the help you need.  Again, I just want to remind you to carefully and objectively assess your situation.  Don’t let lower monthly payments lull you into a false sense of security and cause you to fall further into debt.

Tags: credit card consolidation, debt management plans, lower interest rates, lower monthly payments, lower payments, minimum payments, reduce debt, reducing debt