Some people will advocate calling the credit card companies and asking them to lower your interest rates. Sometimes this works, sometimes it doesn't. If you follow through on threats to cancel the card if they don't lower your rate you can end up damaging your credit rating. If you tell them you can't afford the higher payments, they may judge you a higher risk and increase your rates. So what to do?

Credit card companies actually love it when people carry big balances, as long as they pay the bill every month. If you haven't defaulted, had repeated late payments, or declared bankruptcy, chances are you are getting offers for new credit cards in the mail every week. Like many, once you dug yourself into a credit card hole, the last thing you want is another credit card so you toss them straight into the shredder (to prevent someone from applying in your name and stealing your identity). However, you need to start opening them and reading them. Look for three things. The lowest promotional introductory rate on balance transfers, the longest term for that promotional rate, and a standard interest rate.

Many offers will give you a zero percent interest rate on balance transfers for 12-18 months. Others offer something like 2.99% on balance transfers for the life of the balance. Taking advantage of one of these promotional offers can help substantially reduce the interest rate you are paying on your current balances. However, applying for too many credit cards within a 6 or even 12 month window can be seen as a sign of financial desperation by lenders and may hurt your credit score. So choose only the best offer.

Take a month and go through all your incoming credit card offers. Pick one with the lowest, longest term introductory rate, but not one with a much higher than usual standard rate, and apply to transfer all your current balances. List the transfers in order from the highest current interest rate to the lowest. So that if the credit line they offer won't cover them all, you can easily determine which one(s) are most important to get transferred. Meanwhile keep paying the old cards! Many people assume that once they've sent in this transfer request, the old cards are taken care of immediately. That's not the case. Keep paying the old cards as if nothing happened until you get a statement from them showing your balance has been paid off.

Once you get the statement with the paid off balance, remove the credit cards from your wallet. Put them away in a safe deposit box or cut up every one of them except the one with the lowest standard interest rate. This is your emergency card, for use ONLY as a last resort for emergencies. Also remember that the new card probably will charge the standard rate on any new purchases. Not only that, but any payments will go toward the low interest rate balance transfers first, leaving the new standard rate balances for last while they accrue interest month after month. Once you make your balance transfers, you must stop using credit cards until you have them completely paid off.

If you don't get promotional credit card offers in the mail, it may be that your credit rating is already very bad, or it could be that you have opted not to receive pre-screened credit offers. In this case, go online and look for major credit card banks. Call them up and ask if they have any balance transfer promotional offers. They'll be happy to send you all the details.

Now you have 12-18 months of time when your credit balances will be racking up little to no interest charges. If you want to dig yourself out of the hole, take advantage of this. Send every spare cent and as much as you can afford in as payment against your balance. You want to have as much as possible paid off when the promotion expires. Don't use payment holidays or send in minimum payments. Always send in extra even if it's only a few dollars. Your number one financial priority has to be to retire those large credit card balances. Once you do, think of all the money that will go stay into your pocket each month.

Author: Brad Sylvester