January 15,2009
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#1 2009 Resolution: Lower Debt, Pt.4 –
– Serious options.For those who are more serious about getting out of credit card debt, there are a few more options. They require more work but, can make the biggest difference.
Home-equity line: One possibility to explore might be Moving credit card debt over to your home-equity line. This would only help if the interest rate on the home equity was substantially lower. You would only to consider this method if you were confident if future income. It would never be worth the risk of losing you home to save a few bucks on an unsecured credit card debt.
Refinancing: Another possibility might be to consider refinancing your home for a longer period to a lower interest rate. If you're paying 17% on your credit card and can get a 5% rate on a refinanced mortgage loan over 30 years, you could escape the high credit card interest hit. Your mortgage would be extended on paper but could, actually, be paid off quicker with the discipline of applying all the money you save from the paid off credit card toward that mortgage or even, toward your car loan. You'd be saving money either way. But, if you're not disciplined enough to set that money aside for that purpose, it may not be worth your while.
‘Balance Migration': The last method has worked extremely well for me. Instead of a quick Balance Transfer, you can perform a ‘Balance Migration'. This is where you secure a new credit card with 0% interest for 12 months and use it for as much of your normal spending as possible. No additional charging, please. Make sure that when the 0% promotion expires that the hike won't be too steep (mine jumps from 0% to 6%, which is pretty reasonable). Every dime you charge on that card needs to be immediately applied to your highest-interest loan. Whatever you do, please be responsible and thorough.