Debt

Credit Card Debt

Credit card debt is arguably the worst type of debt. It carries high interest rates which is basically money in the garbage. This bad debt must be eliminated as a first priority. Failing to do so, may result in a noticeable drop to your FICO credit score.

It is not a secret that many people in the United States are in debt. When you realize the negative impact credit card debt has on your credit score, financial capabilities and your creditworthiness you may want to pay it off as soon as possible.

Credit Card Debt Relief

The first step is to reduce your credit card debt by budgeting properly. This isn’t a hard task but requires persistency and commitment. After all it is for your best interest. You’ll be able to make larger purchases, get quickly approved for loans and all with better terms and interest rates.

Contact a credit counseling organization at first. There are reputable non-profit organizations that can give you some very helpful advice as to repairing your credit and getting out of debt. Unfortunately, they can’t help in every situation. Some cases you might find that the best solution would be to do it on your own or find a trustworthy company that will help you eliminate debt. It really pays off in the long run.

Debt Consolidation Loans

Many consumers find debt consolidation loans as a quick option for eliminating their credit card debt. You may find the rates to be a bit high, but that really depends on your credit score. It is recommended that you raise your credit score before you apply for a loan, although that may take up to 6 months. Once approved for the debt consolidation loan, you use the money to pay off all of your debts. Doing so will boost your credit score even more. Now all you have left is to pay off the new loan.

Rule of thumb: Do not get pay lower interest rates with a higher interest rate loan. Let’s say you have a loan that you are currently repaying at a rate of 6% and the debt consolidation loan you are quoted is at 10% it wouldn’t make sense to consolidate the lower rate loan. Try to get the lowest rate and borrow enough to pay any long term payments that carry high interest rates.

Get Rid of High Interest Credit Cards

One of the reasons for your credit card debt is the credit cards! Yes, I know that sounds obvious, but what are you doing about it?

Getting rid of your high interest credit cards is a very simple process which requires a pair of scissors and a trash can. You don’t need more than one credit card and a maximum of 2 per household. Consider applying for a secured credit card or a very low interest credit card such as a 0% APR credit card, but, only if you really need one.