Debt consolidation - Your options on reducing debt

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Recent studies conclude what we have been worrying for many years. Personal debt is on the rise for many years and individuals are getting sucked into the downward spiral of debt. Bill payments get wacky at times when you are inbetween jobs, out of job or are losing money in your business. At such times it is important to understand and research debt consolidation as an option to consolidate all your debts into one debt. Sometimes simply calling up your credit card company and requesting them a reduced interest rate does work. Credit card companies want to earn your business and will be willing to take a credit card interest rate cut to keep you as a client. Also moving to a lower interest credit card to consolidate all your high-interest credit cards will help you short term on your debts and finances.



How to get out of debt fast
You go to the mail box and scan - a couple fliers (nah), your magazine subscription (yes!) and bills (groan). Every month the bills show up and as you sigh and take out your check book you wonder if you will ever be free. Each month you pay the minimums and although you KNOW you've got a handle on it - you are not charging your credit card or accumulating new debts anymore - it seems th... Read debt consolidation article



Debt consolidation - Your options on reducing debt
Studies show that Americans are now saving less than ever before. Along with that, Americans are carrying a heavier debt load than ever. It's easy for a home loan, a car loan and a few credit card bills to get out of hand, and many people are struggling with more debt than they can easily pay. To make matters worse, new bankruptcy legislation will make it harder than ever to file bankruptcy for those who simply cannot pay their bills.

There are a number of solutions available that allow most people to reduce their interest rate on their debt, reduce their total monthly payment, or both:

Ask for a lower rate on your credit card. If you have been making payments regularly, and you haven't had a history of late payment, you may be able to lower your interest rate on your credit cards simply by calling your credit card company and asking them! It doesn't always work, but the market for credit cards is pretty competitive these days, and many lenders would rather lower your interest rate than lose you as a customer. It's worth asking.

Get a new credit card. If your lender isn't willing to lower your rate, shop around for a credit card with a better interest rate. There is no reason to be paying 20% or more in credit card interest if you don't have to. The interest on credit cards is not tax deductible, but if you can get a credit card with a lower interest rate and you move balances from other cards to that one, you can save quite a bit.

Take out a traditional bank loan with collateral. You can probably obtain a simple installment loan from your bank by putting up cash or investments as collateral for the loan. Like credit cards, the interest isn't tax deductible, but the interest rate may be better than credit cards, and if you consolidate several payments into one with a bank loan, you will lower your monthly payment.

Take out a home equity loan or home equity line of credit. If you have equity in your home, you can borrow up to 80% of your equity in either a lump sum or a revolving line of credit. Interest rates are still quite low on home loans, so this one could be a good way to consolidate your debt. As a bonus, the interest is tax deductible. A minor downside is the fact that these loans usually have application fees and/or closing costs.

Most people can utilize one of the ideas above to help them reduce their debt. If none of these options work for you, you should consider speaking to a credit counselor, who can outline other options that may work for you. Many credit-counseling agencies are non-profit, so it may be worth your while to talk to a credit counselor if nothing else will work.

©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and HomeEquityHelp.net, a site devoted to information regarding home equity loans.

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Debt consolidation - How to reduce credit card costs

Americans are using credit cards more than at any time in history, and credit card companies are reaping record profits. One of the reasons that the credit card industry is so profitable is that so many of us use our credit cards unwisely.

If you have good credit, you can get a credit card with a reasonable interest rate; say 10% or so. You can keep that rate by paying your bill on time. On the other hand, if you pay your bills late or fail to pay in full, then you will have to pay late fees and interest. Late fees often range between $15 and $29; some card issuers may charge even more. Adding to the pain of paying late fees, however, is the likely change in interest rates on your card if you pay late. A late payment may trigger a substantial increase in the interest rate on your card, and that "reasonable" interest rate of 10% may suddenly rise to 20% or even 25%!

It's hard to pay off your credit card balance when you have late fees and 25% interest, so this is something you definitely want to avoid. If you usually pay on time, and you pay late once and are charged a late fee, ask your credit company if they will waive the fee. They will often do it - once. Some will not do it at all, but it is always worth taking the time to ask. If they are unwilling to help you, then you may be better off shopping around for a better credit card deal elsewhere.

You can often save money by transferring your balance to a lower interest credit card, if you have one. Competition has been fierce during the last few years among credit card companies, and it is fairly common to receive "promotional" rates of less than 5% if you transfer your balance to another card. Be sure to read the fine print, however. Those low rates usually apply only to transferred balances, and not to new charges placed on the card. There is usually a time limit associated with the promotional rate, and higher rates may apply at the end of the time limit, perhaps even retroactively!

In summary, if you want to minimize your credit card costs, try the following:

Shop around for a credit card with a low interest rate.

Pay your bills on time. A good way to do this is to pay online. That way, you won't have to worry about your check being delayed in the mail.

Transfer balances from high interest rate cards to cards with lower rates.

Use your cards wisely. If you can pay cash, do it.

A few simple steps can save you a fortune in interest charges and late fees.

©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and HomeEquityHelp.net, a site devoted to information regarding home equity loans.


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Debt consolidation - Your options on reducing debt
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