5 Ways to Reduce Your Debt Payments

If your debt looks like a mountain and your budget feels like a shovel, you probably feel like it will take a miracle to get rid of your debt for good. The miracle you need might be in one of these five ways to lower your debt payments. Start at the top of the list and work your way down. At least one of these, possibly two or three, will work in your favor and help you get those debt payments to a manageable level.

Negotiate With Creditors

Woman paying bills with huge credit card.
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It only makes sense to ask the people you owe for a break. Use your credit report and recent billing statements to come up with a list of all your creditors and lenders and the amount you owe them. Then, figure out how much you're able to pay each. Call each creditor and let them know you're willing to pay the debt but can only afford to pay $X.

Your credit card issuer may offer a hardship plan that will lower your payments or interest rate for a period of time.

If the customer service rep says no, don't fight or argue, simply ask to speak to a supervisor and ask again. Make sure to get any agreement in writing, preferably on company letterhead, before making a payment.


Combining your debt with debt consolidation or a home equity loan can give you a lower monthly payment. Average the interest rates on your current debt and look for a loan that has a lower interest rate than your current average.

If you qualify for the loan, you can use it to pay off your existing debts, then focus on making a single monthly payment on the loan. Debt consolidation loans aren't the only option for consolidating debt. Consider also a personal loan, home equity loan, or cash out refinance.

Be careful about getting a loan that simply lowers your payments by extending the repayment period. You'll likely end up paying more interest over time than you would otherwise.

Transfer Balances

If you have a good credit score, you can often get a balance transfer credit card with a lower interest rate than your other credit cards. Sometimes you can even get an extremely low introductory interest rate (as low as 0% in some cases) and use the introductory period to make interest-free payments on your debt.

You can use CreditCard.com's balance transfer calculator to calculate how much you'll save by transferring your balances.

Sign Up for Credit Counseling

Consumer credit counselors are sometimes better skilled at negotiating lower interest rates and payments from your creditors. Enrolling in a credit counselor's debt management plan, or DMP, will allow you to get lower monthly payments making it easier to pay off your debt. Credit counselors can also help you make a budget and teach much-needed money management skills.

When you're choosing a credit counselor, make sure you choose a reputable one (hint: they're usually non-profit). Be careful not to confuse them with debt settlement companies who offer to lower your debt but often make your credit worse.

File Bankruptcy

There are times when the debt you owe is just too much to pay, even with lower payments. In this case, you might consider filing bankruptcy. The new bankruptcy law prevents people from abusing bankruptcy by requiring an income-debt comparison and consumer credit counseling before you can file bankruptcy.

Chapter 7 bankruptcy will allow you to completely wipe out certain debts while Chapter 13 bankruptcy will create a payment plan.