Strategies to pay off credit card debt


 Q. I have several outstanding credit cards bills. What is the best way to go about paying them off? And are credit counseling agencies advisable to used?

A. We’re glad to hear you want to pay down your debt, and we hope you’ll use restraint when shopping this holiday season.

There are several potential strategies to consider when looking to pay off credit card debt.

First, you should identify all the credit cards on which you carry a balance, said Michael Green, a certified financial planner with Wechter Feldman Wealth Management in Parsippany.

Next, determine which credit cards have the highest interest rates and which ones have the lowest, he said. Then, target the card with the highest interest rate and aggressively pay down the balance, and then move to the next highest rate card in descending order.

“Do not pay only the monthly minimum when paying down credit card balances,” Green said. “If you make only the minimum payments, you ultimately pay multiples of what you originally charged.”

If you have the cash flow available to pay off your debt in 12 to 18 months, Green said you can consider finding a zero interest credit card promotion to which you can transfer your existing balances.

“These promotions are not always available and not all borrowers will qualify,” he said. “Assuming you are able to find a zero interest credit card to consolidate your debt, you should make the transfers and begin aggressively paying down the balance.”

Before turning to a credit card transfer option, if you’re a homeowner and you have equity in your home, consider using a home equity line of credit (HELOC), said Brian Power, a certified financial planner with Gateway Advisory in Westfield.

“This will refinance the debt to a much lower interest rate and allow you to deduct the interest that you pay on the home equity line of credit,” Power said.

Of course, be sure that you don’t let the balance sit, or you’ll end up putting your home in jeopardy in exchange for some old shoes and pizza.

On the idea of credit counseling, Power said when someone is struggling with something in their life, counseling is always a good idea.

“Counseling can help you get a better handle on why you have too much credit card debt in the first place as well as make you accountable to someone so you follow through on a plan,” he said. “Most reputable credit counselors are non-profit and offer services at local offices, online, or on the phone.”

While using a credit counseling agency can help turn your financial life around, unfortunately, there are many sleezy companies out there.

Green recommends you be sure the agency you choose is a non-profit organization that’s been in business for at least seven years and is properly licensed by the state. Also, he said you want to make sure the fees are minimal and the counselors are certified.

Check out any agencies you consider to make sure they’re a member of the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling.

And, you can learn more about choosing a credit counselor on the Federal Trade Commission’s web site.

Email your questions to .

This story was first posted in December 2014. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.