According to TransUnion (a leading credit reference agency), the total amount of debt per bank card customer was $5,710. As with any average, this figure doesn't fully show the level of debt that many American families face. Fortunately, there are several excellent credit card debt reduction methods that can help restore parity to personal finances. There are no quick fixes, but a few simple lifestyle changes can help to remedy a financial imbalance with respect to most forms of unsecured debt.
Credit Card Debt Reduction
It is possible to clear credit card debt with a debt management plan or debt settlement program. The major negative of both of these techniques is that it will be necessary to default on the terms of the credit agreement in order to get creditor acceptance. Other hard-up borrowers may wish to preserve their good credit score and apply for a loan to consolidate debt and/or improve their household budgeting instead.
Clear Credit Card Debt Through Improved Budgeting
The easiest way to achieve credit card debt reduction is through effective budgeting. It is sensible to document all sources of income and expenditure to see if any potential savings can be identified. For example, refinancing the mortgage to reduce repayments each month. It may be possible to work overtime or sell some surplus household items to increase income and clear credit card debt more quickly.
Credit Card Debt Reduction with a Consolidation Loan
A loan to consolidate debt will mean that the consumer will no longer need to worry about the indeterminate nature of revolving debt. Instead, they can clear credit card debt over a defined period of time at an affordable rate. Whilst it may be possible to get an unsecured loan from Prosper.com, most individuals will need to take out a loan that is secured on the family home.
How a Debt Relief Program Can Clear Credit Card Debt
- Credit card debt settlement. Following a series of negotiations with creditors, it may be possible to reduce the principal (amount owed) by up to 50%. The remaining money owed will be repaid over a 12, 24 or 36 month period.
- Debt management plan. The objective of this program is to reduce debt repayments to an affordable level. Unlike a credit card debt settlement program, there won't be any reduction to the principal. Most creditors will be prepared to freeze further interest and charges.
The Importance of Credit Card Debt Reduction
It is important to take action to clear credit card debt as interest and charges will gradually consume an ever-increasing percentage of any available disposable income. A qualified credit counselor will be able to provide the consumer with budgetary assistance and help to decide whether a debt management plan or debt settlement program is the right way to proceed.
Sources
Woolsey, Ben. " Credit card statistics, industry facts, debt statistics." CreditCards.com
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
Comments