How I FINALLY Made the Road to Freedom from Credit Card Debt a Reality
Updated: Mar 25
One of my goals for 2020 was to get my credit card debt under control. I got my first card in 2016 at the age of 25; that one card quickly turned into six (three store cards and three credit cards). I've always made payments on time and never missed a payment, but after a few years I was fed up. The high interest rates were KILLING me and my balances weren't budging. Student loan payments were on the horizon and I knew I needed to do something.
Before I continue, I will preface the article with this:
I AM NOT A FINANCIAL ADVISOR OR EXPERT.
I AM NOT EMPLOYED BY NOR AM I AN AMBASSADOR FOR ANY OF THE COMPANIES OR WEBSITES I WILL MENTION IN THIS ARTICLE.
IF YOU HAVE SPECIFIC QUESTIONS ABOUT THE PROCESS AND/OR YOUR ELIGIBILITY PLEASE CONTACT THESE COMPANIES DIRECTLY.
I write this piece speaking specifically and solely from my experience and knowledge (or lack thereof).
In short, #Credible helps you find lenders who are willing to help individuals consolidate their debt by offering loans with lower interest rates/APRs. This process does not 'wipe out' or get rid of your debt; it helps make paying off that debt easier, and in the long run you repay less than you normally would. Credible can also connect you with lenders who assist with other expenses (moving/home improvements, medical expenses, etc. Everything is explained on the site; explore Credible HERE )
My total card debt was just under $5,000. I’m aware that many folks owe WAY more than that but Credible can connect you to companies that will assist with up to $100,000 worth of debt. Credible even helps you find lenders who assist with refinancing student loans; that's something I'll be investigating for myself in the coming months,
After I submitted some of my information to Credible the top lender suggestion I received was #LendingClub. Lending Club is a company that has investors who pool funds to provide loans for borrowers. Lending Club isn't the only company that does this, but you can browse their website here to learn more.
The entire process took about two weeks. Everything was extremely simple.. so simple that it actually worried me. I Googled the company multiple times and showed the preliminary documents to my mom and sister (who both work in finance). Everything is legit.
Once I was approved for my loan and agreed to the terms I had the option to either have the funds sent directly to my bank account OR have Lending Club send the money to my credit card companies. I opted for the latter; I didn't want to see that money come into my account and be tempted to do something I had no business doing. Deciding whether or not the money comes directly to you is *of course* a personal choice, but with these choices comes honesty with self and ownership of the financial decisions being made. The purpose of me applying for the loan was to help get myself out of debt, not potentially dig myself in an even deeper hole. I was sure not to borrow more than what I actually needed to pay off my cards. Remember, with this process you are still borrowing money that needs to be repaid (with interest).
The repayment plans that lenders offer will include variations of APR rates, monthly payments, and repayment periods. For example I selected a plan that has a higher monthly payment BUT has lower interest/APR rates (in comparison to the other options) and will get the loan paid off in three years (or less). If you choose to go with a lower monthly payment your repayment period will probably be longer, and/or the interest/APR rates will be slightly higher. KEEP IN MIND overall you still make out better than paying those card companies directly. The takeaway: you do what works best for you and your budget.
My monthly payment to Lending Club will save me over $100 a month, and I always have the option to pay more every month to get it paid down faster. Once those card balances get back down to $0, the true test comes with refraining from the spending habits that created the card debt (or at least having the discipline to keep card spending to a minimum and pay them down immediately after use, which is what I plan to do to continue raising my credit score).
You don’t have to close your cards once they’re paid off (and after reading /asking around it isn’t the best for your credit to do so). My personal advice (again I am NOT a financial advisor) is if you know you won’t be disciplined, close the card(s). Sure your credit score will go down but it is temporary and will eventually go back up (so long as you continue to be financially responsible).
I ended up closing one of my credit cards because there was a monthly maintenance fee (I wasn't going to continue to pay for a card I have no intent on using in the future). I have decided to keep my three store cards and other two credit cards. Having one loan not only saves me money but has also simplified my monthly bill paying process. Instead of having to pay SIX entities (on top of other bills I have) I'm now only paying to one entity. I'm obsessed with being organized so being able to FINALLY remove some of those reminders from my calendar has put my overly organized brain at ease.
The road to freedom from daunting credit card debt is finally within arms reach. Deep breath in, woosaaahhh.
Composed with humility and truth,