Online Credit Counseling Tips

• College Students: Credit Card Debt Trap for a college student
• Instead of a New Year's resolution, make debt reduction a goal for life.
• Why is paying the Minimum Monthly Payment not enough?
• Holiday Spending: How to keep your debt load down
• Is there an alternative to debt consolidation and/or personal bankruptcy?

Is there an alternative to debt consolidation and/or personal bankruptcy?

Some people decide that the need debt consolidation when they are unable to pay credit card bills. Still, there are some things to consider before you embark on the road to debt consolidation.

Firstly, how bad is your debt? Are you paying more that then monthly minimum? If you are able, try spending more than the monthly payment. Most of the time, when you pay your monthly minimum, you're mostly paying interest on your balance. That means only a small percentage of your payment is going to the actual debt owed to the credit card company. If possible, you should try to pay more than the monthly minimum payment. This may mean cutting back on some of those things you splurge on. In the end you'll pay off your debt faster and save hundreds on interest.

How many credit cards do you have? Do you have any with no balance on them? Is their APR lower than the one you're currently paying off? You may want to consider transferring a balance to this card and pay a lower interest rate. Contact the bank that you will transfer your balance to and see what offers they have. If you have good credit, you may want to find a balance transfer credit card offer and move your balances to the new card. As low as interest rates are now, its easy to find a great offer. You may also want to check your credit score to see if you would qualify for such offers.

Do you have any cash lying around? Take money out of your savings account and use it towards your debt. If the return on your savings is less than the interest you pay on your debt, this is probably your best option. Try using this savings calculator vs. credit card interest payment calculator. No cash lying around? You may want to ask family for help!

Are you a homeowner? You can always take out a home equity loan from the equity you have in your home. This is a great way to pay off debt! There are many offers out there that can help you get the best home equity loan.

If these options are not available to you, you may want to consider a debt consolidation program or non-profit credit counseling. They can help negotiate your debt with your creditors and lower your interest rate.

If you need assistance negotiating your debt, you may want to consider a debt settlement program, or credit repair assistance.

There are other tips out there that can help you make your final decision. The Motley Fool has a great resource on what to do before you decide to declare bankruptcy.

Posted Nov 2005 [ linkback ] return home