5 techniques to reduce what you owe on credit card debt
How to Tackle Credit Card Debt
How to Get Out of Debt This Year
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If you've got excessive credit card debt, it can truly cause you to have nightmares. The first thing that you should do to avoid a lot of debt is to stop using your credit cards and prevent acquiring further debt. Once you get out of this situation, you'll need to make sure that you rectify your spending habits and make adjustments to your financial life so you don't fall into this financial hole all over again. If you want to knock off your big card balances, you should check out the tips given below:
Consider a consolidation loan to pay off your cards only after you weigh the pros and cons of such a loan. But don't count them out completely, as they may actually be a good solution in many cases. You may want to try out a 0% balance transfer credit card or at least a lower rate card if you've got the discipline or plan to pay off your balance aggressively, or you may want to apply for a loan at a peer to peer lender instead, if you've got good credit. One we recommend is Payoff. Click here to read a review about Payoff submitted by a Dollar Stretcher reader.
Consider debt settlement. Try to discount your huge credit card debt. You can discount up to 50% of your original balance through negotiation. When you can't keep up with your monthly card payments, debt settlement can work as a better solution for you. If the credit card companies realize that you're on the way to filing bankruptcy, they are typically willing to receive a payment, which is as low as 50% of your original balance. You can send a letter to your credit card company, clarifying your financial condition and how you would arrange for the money to pay them off. Inform them that you're thinking about bankruptcy but that you'd rather settle your debts if the creditors are ready to accept it. Many companies will likely agree to settle since they know that once you opt for bankruptcy, they won't be seeing a penny.
Pay off your credit card debt using the right strategy. When you're trying to address your debt problems, prioritize on paying off your high-interest credit cards first. Budget a certain amount of money to pay off your cards each month. Make the minimum payments for other cards while directing the rest of your money to the card with the maximum interest rate. Once the card is paid off, shift to the card with the second highest interest rate. This way, you can save a significant amount of money on interest charges. It is the quickest means to eliminate credit card debt.
Don't buy credit card insurance. In the event of an injury or unemployment, this type of insurance stops your payments. It is a costly form of insurance that doesn't really help you get rid of debt, but rather delays your payments.
Don't buy credit card security insurance. This type of insurance compensates for unauthorized charges if your card gets stolen. As many cards are now offered with zero liability clauses, it isn't really so essential.
If none of the above techniques works for you, then you may want to consult a credit counseling agency. They can help you negotiate better rates or advise you on how to lower your huge debt burden.
This guest post is offered by The Digerati Life, which is a site that covers a wide range of topics on personal finance from discount brokerage reviews to some of the best credit card offers available to consumers today.
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