These people are a paycheck away from disaster. I’ll tell you what I did two years ago and it has been the best thing for me. I cut up my credit cards and just use my debit card. I do not have a big payment starring me in the face at the end of each month (I used to pay off the cards each month). Credit cards are a trap. As one poster (at least) said, if they miss a payment on ANYTHING (phone bill, house payment, electric bill, credit card), the card issuer uses that as an excuse to bump the interest rate up to the upper limit, which is typically 30%. I listen to a money show where people call in with their troubles. Almost all of them have very high credit card debt, extremely high interest rates (due to missing some other payment) and it is killing them.

I wouldn’t recommend them taking out a loan to pay off their credit card LOANS (people forget they laoned themselves money!). They won’t be changing their habits. Too many people get a HELOC, pay off the cards, then run them back up. Then they have credit card debt AND the HELOC, with no access to more money (unless the house still has room for more HELOC….can you say crazy?). They need to buckle down, cut up the cards, then start paying off the debt. Do as Dave Ramsey says, start with the smallest amount, then work up. As they pay off the smaller loans, then they have more to apply to the bigger ones. Just pay minimums on all the rest as you attack the smaller amounts, working up.

My wife and I have no credit card debt at all and it is WONDERFUL, believe me.