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Credit Card Debt Reduction - 4 Ways to Reduce Credit Card Debt

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         Views: 1865
2009-09-26 06:12:35     
Article by Michael G. Harris

Being in debt with credit cards can seem like you're sinking in quicksand. Although there are many ways to reduce your credit card debt, which is the best one for you? Here is an overview of some credit card debt reduction strategies and which one might apply to you. In this article we'll discuss debt relief programs, an equity line of credit, balance transfers, and the focused payoff method.

First, let's discuss debt relief programs. A debt relief program is probably something to use as a last resort. If you are getting collection calls and behind on payments, then this may be your best option. A debt relief company will be able to contact your creditors and make different payment arrangements. In most situations, they negotiate with your creditors to have late charges waived, reduce interest rates, stop collection calls, and halt any legal action against you.

They should be able to get your debt rescheduled on a reduced payment plan which will make it easier for you to pay the minimum payment each month. Charges and monthly service fees with these companies can vary widely so be sure to shop around. Also, prepare to have your credit score go down for awhile if you choose to use one of these companies. It could take several years before you get another loan once you use a debt reduction company.

Our second option involves a home equity line of credit. This is a a way to obtain a low interest rate loan if you own your home and have equity built up. Be sure to read the details of the loan to make sure that the interest rate is not an introductory offer only. If it is, make sure that you find out how much the interest rate will go up before your loan is paid off. Avoid programs with teaser rates that go up quickly after closing the loan. Also, remember that a home equity line of credit is tied to your #1 asset - your home. If you happen to miss payments on this type of loan, the banks have the right to come after your home. So be sure to use this one wisely.

A third option is to take advantage of 0% balance transfers that come in your mailbox. This can reduce your credit card debt by transferring your balance to another card with a low introductory or promotional rate. This rate usually lasts for up to 1 year. During this time period, you will usually have lower monthly payment and pay less in interest. This technique allows more of your money to be applied to the principal, which will payoff your debt faster. Of course, the downside is that there are usually transfer fees of 3% of the balance with these offers. These extra fees can eat up some of your savings. Also, be sure to understand what the normal interest rate will be after the introductory period is over. Many times, it will be a much higher interest rate of 10% to 20%. Also, if you miss just one payment, your interest rate will go up significantly. Only use this method if you're sure that you can pay off much of your debt within the promotional time period.

Finally, let's talk about focused payoff method. This is the best method to use if you can still pay all of your bills on time and want to control a proven plan to payoff debt. With the focused payoff method, you make a list of all of your debts with the balance and minimum monthly payment on a sheet of paper. For example, you might have a Master Card with a minimum payment of $25 and a balance of $3,000. List all of your debts like this down on a sheet of paper. After all of your debts are listed, then just focus on one. For most people, it's the one with the smallest balance. Now, start paying down on this one debt. Once it's paid off, start paying down on another one.

Keep this process up and soon you'll be living a debt-free, stress-free life. The advantage to this method is that it doesn't require you to deal with any companies or go beg for another loan. You simply use the power of focus to your advantage. Most people who use this focused payoff method can have their credit card debts paid off in a matter of months. Now, how would it feel to go to your mailbox and not see a pile of credit card bills?

Use one of these credit card debt reduction strategies to start living your life the way it was meant to be!

Credit Card Debt Reduction - Sign up for our free debt elimination course that has helped many people obtain a debt-free, stress-free lifestyle.

Specialized in: Credit Card - Debt Reduction
URL: http://www.turningdebtintowealthsecrets.blogspot.com
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