These days, it’s common for consumers to find themselves accruing more debt faster than they can pay it off. It may be because of the difficulty of paying on time or putting together the money to make the minimum every month. Regardless of these reasons, more and more people are sinking further into debt every day by racking up interest and late and over-limit fees that add onto the principle balance.
Getting stuck in the red is a stressful experience. The more debt an individual accumulates, the more pressure they exert on themselves to be able to pay. Those seeking solutions to credit card debt have several options to ease their worries, including:
Debt Settlement and Debt Management
If you feel that your balance has gone beyond your control, you may want to consider looking into credit card debt solutions with a trusted debt relief company. Among the solutions that they can offer you are debt settlement and debt management. These 2 are typically chosen by someone who is gainfully employed or has a source of income, has two or more credit card accounts, and owes at least $2,500 in debt.
Debt settlement is the best option if you wish to cut down the total amount of money you owe. For this, you’ll need to set aside money for a certain amount of time. While you’re doing this, the debt settlement company will negotiate with your creditor on your behalf, aiming to lower your total balance in exchange for a lump sum payment. Once an agreement has been reached, the money you saved up will be used for the payment. This method allows you to wipe your slate clean, even if the amount you paid is smaller than the total debt. What’s more, it also allows you to be free from debt at a much faster rate 24-36 months.
Another option a debt relief agency may offer you is debt management. Unlike debt settlement, this does not give you the chance of reducing your debt, but it may include lowered interest rates and waived fees. In debt management, your debt relief agency will collect a single monthly payment from you and distribute this payment to your creditors. This takes the burden of managing many debts at the same time out of your hand. However, you must be able to afford the monthly payments, and the program should be completed within a span of 60 months.
Budgeting and Other Self-help Measures
If you’re not in any hurry or if constant interaction with debt collectors doesn’t really bother you, then you can take the slow but sure way to becoming debt-free: budgeting. Budgeting to get out of the red entails a bit of planning, reassessing your income and expenses, and sticking to the plan. This method will work best for those who are still able to make payments to their credit card.
One smart way to go about this is to first check all the interest rates on all of your existing credit cards. Choose to prioritize the one with the highest interest rate by paying it down first. From here, you’ll want to stop using your credit card to pay for new purchases in order to keep the balance level. But before considering using this method, make sure that you can dedicate yourself to your budget and that you have the discipline to stick to it to the end. After all, in budgeting, you’re the only one accountable for keeping track of your finances.
Personal Loans and Balance Transfer
Some people prefer to pay their credit card debt off by taking a low-interest personal loan. Home equity or other loans secured on personal collateral can help you get a chunk of debt off your shoulders quickly. But you have to keep in mind that making regular payments towards that loan is crucial to not losing personal collateral. If you choose to go with this debt solution, make sure to check the terms and condition carefully: you may be paying lower interest rates, but if the transfer fee is exorbitant, you gain no savings. It’s also important to make certain with the credit card company that your total credit card debt is within the balance transfer limit.
Before deciding, it’s best that you consider all your options first. A word of advice from a debt expert may also help you make up your mind. If you’re uncertain if you handle this challenge by yourself, there is no shame in seeking professional help. After all, a little help might be all you need to keep you on track towards achieving your financial goals.
To learn more about debt relief solutions and how to start living with financial freedom, contact CreditAssociates for a free consultation or use our Savings Estimator to see how much you could save.