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How to Clear Credit Card Debt without Paying

Credit card debt is a form of non-priority debt which is why some people don’t take it too seriously. 

This is why if it isn’t kept in check, it can build over time to a point where it cripples your finances. 

In this post, I’ll be looking at what your options are if you can’t afford to pay your credit card debt

Deal with Priority Debt(s) First

As I mentioned earlier, outstanding balance on your credit card is an unsecured and non-priority debt. 

You should always take care of your priority debt(s) first. Examples of priority debts include mortgage payments, car loans, council tax debt, rent arrears, etc. 

Once you’ve dealt with your priority debts, you can start worrying about the outstanding balance on your card. 

I Can’t Pay Off My Outstanding Balance. What Should I Do?

This should be fairly obvious but I’ll state it anyway: Don’t buy any more items using your credit card. This will prevent your outstanding balance from increasing even further, thus making it easier to repay your debt sooner. 

It can definitely be worthwhile to talk to a debt professional or an adviser. They might be able to suggest debt solutions and options which you may not have been aware of. 

Please note that if you take debt advice from an agency, be sure to take it from one that does not charge you for their advice. 

Of course, it would be a bad idea to go to an agency that charges you a fee for debt advice when you’re already having trouble paying back the money you owe. 

This is why seeking debt advice from an independent debt charity is always the best and safest option. Some great debt charities that you can contact include Stepchange and Payplan.

I’ve Received a Letter About My Debt. What Should I Do? 

If you’ve received a letter regarding your debt, it’s important that you don’t panic. Ignoring the letter is also something that you should never do as that will only exacerbate the situation. 

The best thing you can do in this situation is to assess your finances thoroughly and work out whether you can afford to pay your debt in any capacity at all or not. 

Again, I have to stress the fact that it’s important that you maintain communication with your credit card company and let them know the details about what you’re doing to address the outstanding balance on your credit card. 

If you don’t keep them in the loop regarding what actions you’re taking, there’s a chance that your credit card provider may pursue legal action against you. 

This could be either by getting a County Court Judgment (CCJ) against you or petitioning for your bankruptcy. 

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Working Out How Much You Can Pay 

Anyone will tell you that you should at least try to pay the minimum payment on your credit card if you can. If you don’t do that, then your creditors might charge you an extra fee and your credit rating (credit score) may also get worse. 

That being said, you should always prioritise priority debts and essential living costs over the minimum repayment on your credit card. 

It’s always more important to stay in your home and avoid legal action than to pay the outstanding balances on your credit cards. 

If you can afford it, try to pay the same amount towards your credit cards each month. 

If you can’t afford it, you should try looking at other options to reduce the debt on your credit card. Please note that you should keep your provider informed about what actions you’re taking to address your debt. 

I Can’t Afford the Minimum Repayment. What Should I Do? 

If you can’t afford the minimum repayment, you should talk to your provider. They might be able to give you a temporary payment break while you get your finances in order. 

They may also help you in other ways such as by lowering the interest rate on your debt. Sometimes, all it takes is a simple phone call to your provider to lower your credit card’s interest rate. 

Your provider will also give you breathing space if you need it to set up a debt solution to address your outstanding balance. This could be in the form of an Individual Voluntary Arrangement (IVA), a Debt Management Plan (DMP), a Debt Relief Order (DRO), bankruptcy or a debt settlement offer. 

It’s generally a good idea to seek proper advice before opting for any one debt solution to take care of the money you owe as they all work differently. 

Balance Transfer on Credit Cards 

You might be able to reduce the debt you owe by transferring the outstanding balance of your card onto another one that has a lower interest rate. 

By doing this, you’re effectively lowering the amount of money you owe. This is a strategy that is used by people who have multiple credit cards. 

Though, this might be tough as you may not be able to obtain a credit card with a low rate of interest if you already have outstanding debt. 

Another thing you have to keep in mind when using this transferring of balance strategy is to keep transfer fees in mind. 

Some credit cards have extremely high balance transfer fees and it would defeat the purpose if that is the case.  

Conclusion 

Not being able to pay off your debts does not mean there’s no way out. There are a number of different options available to you that you can explore. 

Not only that but your provider will also help you manage your debt by relaxing your monthly payment or providing payment breaks. 

Just be sure to be communicative about your situation and cooperate with your provider as you make arrangements to address your debt.

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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