1

Comment

Credit card debt consolidation is one of the many ways to eliminate credit card debt. Before anything else the first thing is to stop spending money with your credit cards. If you don’t eliminate the reason for the debt the money will either stay static or you’ll dig yourself further in.

Digging yourself out of credit card debt takes making a commitment. In order to make a commitment it takes figuring out the best option to pay off your debt. There are some different options:

• Paying off credit cards from current money if possible
• Taking the money owed and transferring it to a secured loan such as a low interest home mortgage loan
• Using a consumer credit agency to consolidate your debts
• If nothing else is possible filing for bankruptcy

Paying From Current and Future Funds

Although unlikely for someone that has gotten themselves into trouble paying down credit cards is the best option out there. You can begin to look at this by evaluating all of the cards that you have and the amounts owed on those cards. You should look towards paying off the cards that have the highest interest first.

If the rates are extremely high you should make this exception for a consideration of getting another card with a lower interest rate and transferring the funds to that card. You could also call the credit card company and simply ask for a lower rate. As absurd as this may sound it is actually something that can happen, sometimes you just need to ask.

The reason behind the thought process of paying off the higher interest rate cards first and then paying only the minimum on the lower interest is that your higher interest cards will actually get more of the principal paid off rather than most of the payment simply going to the high rate of interest that you have on that card. Making the minimum payments on those cards does nothing more than pay the interest and when the balance is high enough there is the possibility that no money at all goes to your principle balance. The low interest cards don’t accumulate as quickly so paying more to the high interest and minimum on the lower interest cards simply makes sense.

Consolidation to Your Mortgage

Paying from current and future funds simply isn’t feasible for everyone as either all of their cards will have a high rate of interest or it is at the point that they have so many cards with maxed out or exceedingly high balances that it simply isn’t feasible to do so.

There is an alternative though through moving the money owed on all of your cards to another loan. The example here would be to move it to a secured loan of your home mortgage. Those people that have enough equity built up in their home can likely refinance their mortgage and add the debts to the home without a significantly higher payment. There is the possibility of even a lower one if there is the possibility of lower interest rates. For those that are able to take advantage of this it would solve the multiple payment issue and the amount of money owed per month.

Credit Counseling

For those that are in horrible shape one great alternative is going to a credit counseling group that will be able to help you negotiate with the companies that you owe money to in order to help either reduce or eliminate your interest so you can pay off your debts more quickly.

There are some amazing credit counseling companies out there but it’s important that you check them out with the BBB (Better Business Bureau) as there are credit counseling agencies that are scams and can end up hurting you more than being able to help you at all. Taking the time and researching a reputable company you’ll be able to get the help you need and be back on the path to financial wellbeing.

Bankruptcy

The last option to consider, and it should be the last option, would be to declare bankruptcy. Declaring bankruptcy would get rid of credit card debt completely. Not everyone is eligible to declare bankruptcy though and often proof is needed to show that there is an inability to pay off debts.

Bankruptcy isn’t an attractive option as it can affect a person’s credit for up to ten years. Although that is the case there are the circumstances where this is the only option and others have no choice to eliminate their debt other than this option. Examine this option as a last resort but its there if you need it.