I put a $2,500 emergency car repair on my credit card 2 years ago, but I have since lost my job — I now owe over $4,900 with interest of 25%. How can I get out of this mess?

Take advantage of a balance transfer offer

A 25% credit card interest rate can make paying off debt almost impossible, especially if you can't make extra payments to reduce the principal balance.

One option is to take advantage of a balance transfer offer. Depending on the card, this can set your interest rate to 0% for a limited time, such as 12 to 15 months. While there's often a small fee for a balance transfer (usually around 3% to 4%), it's added to your balance upfront. Then, every payment reduces the principal, so you make more progress on debt paydown.

You have to qualify for a balance transfer offer, which may be challenging if you have a low credit score. You must also be able to make at least the minimum payment and, ideally, bring your balance to $0 before the promotional rate ends.

It's worth considering even if you can’t, as balance transfers don't hurt your credit and can save you a lot of money.

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Negotiate with your credit card company

Another option is to contact your credit card company. If you tell the card issuer you're struggling, they may work with you to enter into a payment plan, reduce your interest rate, or even forgive a portion of the debt.

Card companies are most likely to work with you if you have missed payments and they think that you are in danger of not paying at all. Unfortunately, missed payments can damage your credit score. If you negotiate a payment plan with your card company and end up paying less than you owe, this can also hurt your credit.

While damage to your credit score is not ideal, working something out with your creditors may be the best choice if you have limited income, don't expect to get a job for a while, or fear you won’t be able to repay all you owe.

An arrangement with your credit card company is better than bankruptcy and gives you some breathing room.

Ensure any arrangements are documented in writing and that you can afford any payment plan or lump sum you agree to. Debt settlement companies can help you negotiate with creditors, but their advice comes at a cost, so consider working out a deal first on your own before you seek professional help.

Budget for extra payments

Finally, consider reworking your budget. This will allow you to send extra money to your credit card and repay your balance. This is a good solution if you don't qualify for a balance transfer card and don't wish to negotiate with your creditors due to the potential impact on your credit score.

Your ability to include increased debt payments into your budget partly depends on your earnings. It might not work if you aren't earning enough to cover essential costs and make extra payments, what may be the case if you're currently unemployed. However, there are ways to make extra money, from starting a side hustle to selling unwanted items.

If you can increase your earnings and get serious about debt payoff, you can free yourself of this burden for good. Ultimately, your best option depends on what you can afford to pay both now and in the future, the state of your credit and your level of concern about your credit score.