Reducing Credit Card Debt

About Reducing Credit Card Debt

How can you tell if your debt load is too high? You're unable to make the minimum payments on your credit cards. You borrow from one credit card to pay another credit card. You're frequently charged fees for late payments or going over your credit card limit. You use credit cards out of necessity rather than convenience. You don't contribute to your retirement plans because of credit card debt. You devote more than 20% of your take-home pay to making payments on credit cards and loans other than your mortgage home loan.

Are you in any of these situations? You must find a cure in order to work out better terms with your creditors, consolidating your debt on a credit card that carries a low interest rate or, if necessary, taking out a home-equity loan.

Reputable credit counselors usually can assist you create a debt management plan that works for you.

You can give yourself some time with a lower interest rate credit card or a low introductory rate credit card for your balance transfer. You may also be able to take advantage of an offer that gives you a low fixed rate for the life of the debt.

There will be residual effects when changing credit card offers, your FICO® credit score to drop because lenders take note when you apply for or open a number of accounts within a short period of time. To limit the damage to your credit score, keep existing accounts open when you move a balance to a card that offers a better deal. Closing an account reduces the average age of your accounts and increases the ratio of your outstanding debt to your available credit. Both of those factors will have a negative impact on your score.

A good credit counselor should give you advice on how to rein in your spending, as well as being able to craft a debt-management plan for paying off your creditors. Under such a plan, the counselor works with creditors to lower your interest rates or work out better repayment terms. You make a single monthly payment to the agency, which then pays your creditors. A counselor's services should be free or cost no more than a nominal fee.

Before you look for a credit counselor, try the do it yourself approach. You might be able to get immediate relief simply by haggling over fees and interest rates with your creditors.

The bargaining requires preparation and persistence. Know how much you spend with a particular card issuer and what terms you'd like to propose before you make the call, then be ready to act on any offer made over the phone. That gives you leverage when you negotiate. Use low-interest-rate offers you've received in the mail as an incentive for card issuers to adjust your rate and keep you as a customer.

Declaring bankruptcy may be an option. But the bankruptcy law, which was revised in 2005, makes it tougher for individuals to travel this route without a lawyer. An initial consultation should be free. You'll need to bring information about your expenses and sources of income, including pay stubs, tax returns, mortgage papers and documents that detail any unusual health-care or business expenses.

Filing for bankruptcy should be a last resort. Most negative information on your credit report expires after seven years, but a bankruptcy filing stays on your record for a decade. That financial black mark can make it difficult to get credit at a reasonable rate, buy a home, purchase life insurance and sometimes even get a job.

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Consultas Gratis 1-866-647-3383 Tel: 1-866-MIS-DEUDAS