Any interest rate is too high when you're trying to get rid of debt, but if you're dealing with a rate as high as 29 percent getting rid of that credit-card debt should be a top priority. Making minimum payments just isn't enough—if you have a balance of $5,000 at a 29 percent interest rate, it could take you more than 16 years and thousands of dollars in interest to pay it off if you only pay the minimum each month. You have to come up with a more effective plan for eliminating high-rate credit card debt.
Call the creditor directly to ask for a lower interest rate on your account. Sometimes the credit card company will negotiate the rate.
Determine how much extra money you have left over at the end of each month by simply subtracting your total expenses from your total income. If you don't have money left over, consider getting additional employment or eliminating bills. Send all of that extra money to your credit card company each month until the debt is gone. For example, if you send $400 every month instead of minimum payments on the hypothetical $5,000 debt, you'll be done with it in just over one year.
Apply for a lower-interest credit card at another company as another option to temporarily manage the debt. Some credit card companies offer low introductory rates on balance transfers, in which you move your debt from your current company to the new company. Remember that you are just reducing the interest rate for a short time—pay it off within the grace period and don't add any more debt to the new credit-card account.
Call a credit counselor at the NFCC (National Foundation for Credit Counseling) to get rid of the high-rate debt. Investigate the possibility of starting a debt management plan (DMP). When you enroll in that type of plan, you make payments to the counseling agency, who negotiates with the creditor for a lower interest rate and then makes the payments on your behalf. Make sure you ask the credit counselor for complete information about how that type of plan could affect your credit score and history.