Credit Card Debt Reduction: Have You Got Too Much Debt?

Think you are immune from debt? If so, you are mistaken. It is estimated that the average UK household is over $12,000 in debt, so it’s probably thought that this figure is a little on the conservative side.

Credit card debt is the most common type of unsecured debt there is, but it is also the easiest to eliminate. If you have credit card debt and you’re struggling to make your payments, or if you just can’t keep up, it’s time you take action.

A common option to take is considering a debt management plan. A third party will approach all of your creditors and see if they can negotiate better terms on your cards. It is an option that works well for many people, but only if you have a certain amount of debt already.

When this is added together, the total amount of debt is often more than just your credit cards. Your rent or mortgage payment is also a big factor, as is any allowance you pay to your child for their part-time job.

But it’s a good idea to be aware that the additional burden of credit card debt can have a negative effect on other areas of your life if it isn’t taken care of quickly.

How does taking on more debt compare to other helpful measures? When consolidation loans for mortgages and loans are involved, they are often a cheaper means of funding your venture. These loans require an interest rate of around three percent and, when combined, can be much cheaper than credit card interest.

If you are taking on your debt over a longer length of time and not very much upfront, you’ll have to pay in thousands rather than hundreds of dollars per month. This can be a MAJOR consideration if you happen to only have a small amount of debt, such as ten or twenty thousand dollars.

Credit card consolidation usually requires that you take out a loan secured by your home. This means that if you ever get behind on payments, you could lose your home.

With debt management, you work to reduce your payments to the credit card company, and they are then a number of years away from completely wiping out all of the debt. It works in a lot of ways, but if you’re dealing with a larger debt, credit card consolidation can only be a temporary solution.

One viable strategy for wiping out debt is to cut up all the credit cards. This will, obviously, require that you stop using the cards. The one exception to this is if you use debit cards. These force you to pay for everything with cash, that fact giving you a much greater awareness of your spending. It’s easier to say no to a debit card than it is to buy with a credit card.

Understand that the best debt relief is the one that’s within your reach. Debt reduction can only take care of the debt you have right now and not your credit. Should your credit rating be damaged, making minimum payments will do nothing to fix your problem.

An important factor to consider when working with a consumer credit counseling agency is the type of debt they deal with. There are a lot of reputable debt consolidation and counseling firms that focus on making consumers debt-free; however, the newer ones tend to target people with higher debt. For this reason, it’s important to research the company you want to work with ahead of time and be patient until they can help. You can find most of the information you can gain on these companies by researching the Internet.