Credit Card Debt Reduction
Reducing credit card debt may seem like an
unattainable goal these days, but there are solutions
to solve this common dilemma. Here are some credit
card debt reduction options to consider.
Reducing your credit card debt may not be as hard as you think. It might take a long time, depending on
how much you have, but it’s definitely doable. You can pay debt on your own, or you can seek help from a
debt relief company.

Can You Pay Your Debts On Your Own?

Start by making a list of your debts - you need to know what your paying off to make a good plan. (Do this
step even if you think you’ll end up going to a debt relief company.) Many of your debts will be listed on your
credit report. Ordering a copy of your
free credit report through AnnualCreditReport.com - can help ensure
you have everything. Recent billing statements are also a good source of information for your debt list.
Write down each of yours debts, the balance due, the interest rate, and the monthly payment

The next crucial step is to figure out how much you can afford to pay each month toward your debt. The
more you can pay, the faster you can get out of debt. To get started paying your debt, pick one of the debts
from your list, e.g. the one with the highest rate, lowest balance, or one you want to get rid of. This is the
debt that you'll pay off first. Make a big lump sum payment to the account you've selected and pay the
minimum on all the others. After several months of chipping away with large payments, you'll have that
account paid off. Then pick another debt and start paying it off. Repeat those steps until you've paid all your
debts.

This disciplined method is pretty simple, but it can take several years. If you don’t have enough money to
pay off your debt, consider a debt relief option to help with credit card debt reduction.

Consumer Credit Counseling

Consumer credit counseling is a type of solution where a
credit counseling agency puts you on a debt management
plan with your creditors. You'll make a combined payment
to the counseling agency and they'll divide your payment
and send it to your creditors. It can take 4-6 years to
completely pay off your debt on a debt management plan.
Credit counseling may not be available for all your debts.
Typically, you can enroll unsecured debts, e.g. credit card
debt, that haven’t been sent to a collection agency. It is
must that you choose reputable consumer credit counseling,
as utilizing these services may have negative implications
on your credit.

Debt Consolidation

Another option is debt consolidation where you pay off your debt with a lower interest loan. Then, in turn,
you pay off that consolidate loan. People often use home equity lines of credit (HELOC’s) or second
mortgages to consolidate their debts. Home equity loans are sometimes easier to qualify for, when you
have enough equity in your home, since your house is security for the loan.

For those who aren’t homeowners or don’t have enough equity, a
HELOC or second mortgage isn’t an
option. But, if you have a good credit score rating you may be able to get approved for a loan large enough
to consolidate your debt, or a
credit line. You might even choose the unsecured loan if you don’t want to put
your home on the line for your credit card debt reduction.

Be careful choosing a debt consolidation loan with a low monthly payment and a long repayment term.
Long-term consolidation loans are typically a bad idea because it consequently takes longer to completely
pay off your debt.

Debt Settlement

Debt settlement is an option for people who are considering bankruptcy. In this case, your debts may
already be past due or charged off. Or, you may not have enough money to continue making monthly
payments on your debt, perhaps even the minimum payment.

Through debt settlement, you negotiate a lower lump sum payment to completely satisfy your debt. The
drawback is that you'll sacrifice your credit rating to settle your debts. But, if your only other alternative is
bankruptcy, you won't suffer the long-term damage that comes along with bankruptcy.

Choose your credit card reduction method wisely. There are advantages and disadvantages to each of
them and some might be off limits to you depending on your income and the status of your accounts.
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Credit Card Debt Reduction