|
Understanding Three Types Of Credit Card Debt
Help
When it comes to credit cards you've got to be very careful.
Because credit cards are so convenient and so easy to use,
getting yourself into trouble and over your head can quickly
become a problem, even for the most cautious consumers. In no
time you can easily find yourself in need of help with your
credit card debt. If that's your situation there are a number
of options available to you, so let's take a few moments to get
an idea of exactly what types of credit card debt help might be
best for you.
Credit Card Balance Transfers
You may find that a credit card company offers you a credit
card at a lower annual percentage rate than other cards you
already have with existing balances. For example, you may have
two cards with interest rates of 17.5 percent and 19 percent,
and each may have a balance of $1,200. A new card offer might
give you the considerably lower rate of 12 percent, so
transferring your $2,400 in balances to the new, lower-rate
card would appear to make sense. However, you should make
certain that the new rate is not just a short-term promotional
rate. In many cases, these low rates have an expiration date at
which time the rate will increase. If you are seeking credit
card debt help through the balance transfer option, make sure
you know when the promotional rate expires and what the
subsequent long term rate will be.
Debt Consolidation Loans
Many people think that a debt consolidation loan is the best
way to get long term credit card debt help, but that isn't
necessarily the case. There are a number of issues to be
concerned about when considering a debt consolidation loan. In
many cases a loan might significantly reduce your overall
monthly payment, perhaps even to as little as half of what
you're currently paying, but this reduction in monthly payment
can come at a price -- a higher overall annual interest rate.
How can a loan at a higher rate reduce your monthly payment? By
stretching out the payments over a much longer period of time.
In the end, you actually pay much more in total payments than
if you'd have simply stuck with your credit cards.
Credit Counseling Agencies
If you seek credit card debt help through a credit counseling
company, they will work directly with your creditors to reduce
your interest rates and, in some cases, your actual principal
balance. Rather than pay off your credit card companies
completely, the agency will collect your payment and distribute
the funds to the lenders under an agreement that they
negotiate. For their service, the agency will receive a fee,
either from the consumer or from the creditors. Either way,
using credit counseling for credit card debt can keep your
accounts in good standing with your credit card companies while
reducing the total amount you have to pay each month.
If you're in need of credit card debt help, consider the
advantages of disadvantages of three common solutions: credit
card balance transfers, debt consolidation loans, or credit
counseling agencies.
by -
Back
to Top
###
| 
