If you’re struggling to pay off your credit card debt and you’ve exhausted all other options such as balance transfer cards and personal loans, then entering into a bank agreement to pay off your credit card may be one step before bankruptcy.

A bank agreement is when you enter into a repayment agreement with the bank that issued you your credit card.  If you just can’t find the money to pay off your debt because of the high interest rate, a bank agreement may have a lower interest rate in return for regular and specified payments.

For example, if your credit card debt is $10,000 and you can only afford the minimum repayment of approximately $258.33 per month your debt may seem never-ending, especially if you’re paying a high rate of interest, such as 19 percent per annum.  If you only paid the minimum amount each month in this example, it would take you 344 months or 28 years to clear your credit card debt and you would end up paying $15,239.60 in interest!

But entering into a bank agreement may lower the interest rate significantly in return for you signing a document that specifies exactly when your weekly, fortnightly or monthly payment is due and for how much.  You may have to also agree not to use that credit card again.  Otherwise, you really will never get rid of your credit card debt!

If you don’t want to enter a bank agreement, what can you do?  For starters, stop using your credit card!  If you have a revolving balance on it every month, then whatever you buy will end up costing you interest, even if you have interest free days on purchases.

Another way to pay off your credit card if you can’t afford to pay more than the minimum payment due each month is to make a commitment to yourself that:

1.  You will stop using your credit card until you have a zero balance.

2. You will keep up the highest minimum monthly repayment, even when your balance falls and the monthly minimum amount due also falls.

For instance, if you’re struggling with credit card debt of $10,000, then your minimum repayment may be about $258.33 as in the example above.  When you start chipping away at your balance and it starts to decrease, your new minimum monthly amount due will also decrease.  But instead of falling into the trap of only repaying the new lower minimum payment due, keep paying the higher amount of $258.33 per month.  If you do this, it will only take you 61 months to pay off your debt instead of 344 months and you’ll “only” be paying $5,607.67 in interest at 19 percent instead of $15,239.60.

A bank agreement can be one way to pay off your credit card debt if you’ve exhausted all other options.  However, if you don’t want to have a bank agreement on your credit history, then ceasing to use your credit card and paying the highest minimum payment until you’ve cleared your balance may be the next best option for you.