Great Debt Consolidation Suggestions and Tips

Surveys show that Americans are currently saving less cash than ever before.  In addition, Americans are carrying a heavier debt load than an time in the past.  It’s easy for a home mortgage, a car loan and a handful of bank card bills to get out of hand, and countless people are struggling with more debt than they can repay.  To make matters worse, new changes in bankruptcy legislation will make it more difficult to file for bankruptcy for people who simply have no way to repay their bills.

There are numerous solutions available that allow most debtors to lower their interest on their credit card debt, greatly reduce their overall monthly payment, or both:

Look for a reduced interest rate on your charge card.  If you have been timely with your payments, and you have not had a history of late payment, you may be able to reduce your interest rate on your credit cards simply by calling your credit card company and asking them!  It doesn’t always work, but the market for charge cards is extremely competitive these days, and a lot of lenders would rather reduce your rate than drop you as a customer.  It’s worth asking.

Get a new credit card.  If your lender is not willing to lower your interest rate, look around for a charge card with a more suitable rate.  There is no reason to be paying 20%or more in credit card interest if you don’t have to.  The interest rate on charge cards is no longer deductible from your taxes, but if you can get a charge card with a lower interest rate and you move balances from other cards to that one, you can save quite a bit.

Take out a regular loan from the bank with collateral.  You can almost certainly obtain a simple installment loan from your financial institution by putting up cash or stocks as collateral for the loan.  Like charge cards, the interest isn’t deductible from your taxes, but the interest rate may be better than bank cards, and if you consolidate several debts into one with a bank loan, you will reduce your monthly payment.

Take out a home equity loan or home equity line of credit.  If you have home equity, you can obtain a loan up to 80%of your  equity in the form of a one time payment or a revolving credit line.  Rates of interest are still rather low on home loans, so this one could be a fine way to reduce your credit card debt.  As an added bonus, the interest is deductible from your taxes.  A modest downside is the fact that these financial products usually have application fees and/or closing costs.

Most people can make use of one of the suggestions above to help them minimize their personal debt.  If none of these choices work for you, you should consider speaking to a credit counselor, who can outline other alternatives that may meet your needs.  Many credit counseling organizations are non-profit, so it may be well worth it to talk to a credit counselor if nothing else will work.