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The high cost of credit card debt.: An article from: Bank Marketing

Handling Debt Consolidation

The biggest concern of the US today is its ever-increasing credit card debt, which now tops over $1trillion. According to ARA, the average American carries about $8500 in debt on credit cards. Numerous sites now provide free personal credit card debt consolidation services to enlighten the consumers about the looming danger of debt and help them to get out of their credit card debt. The goal of these sites, some of which are state sponsored, is to eliminate credit card debt and create a debt free nation.

All unsecured debt consolidation qualify, for consolidation of credit card debt services. Debts created on credit cards, store cards, lines of credit, medical bills, judgments, taxes, collection accounts, charge offs, personal loans and old due utilities are some unsecured debts. It is always easy to bring down your credit card debt by refinancing your house. However, this way you will put your house at risk. Look for the safest alternatives to free services credit card debt, bankruptcy and foreclosure.

The credit card industry has widely disparate interest rates, which means that consumers spend thousands of dollars annually just to pay interest on debts incurred on credit cards. Consumers who are carrying a huge amount of debt on their credit cards or even those with modest credit card debt at high rates are turning to companies like Finance Box. This company helps consumers to consolidate their debt into lower and fixed rate loans.

The Internet is providing fast, convenient and solutions that really work well. Numerous companies like Finance Box work with thousands of lenders on the net. Consumer information received by the company drives through company search engines, which evaluates consumer needs, and match them to a lender, who meets the specific requirements of the borrower. This gives these consumers an edge over the ones who deal with a handful of lenders on their own. Consumers save a lot of time and money spent on many phone calls or personal calls. This process fast tracks the process of free credit card debt consolidation, and the consumers normally receive a call from the matched lending company within 24 to 48 hours.

Many Americans are asking about a stimulus program to help the average citizen. People today need help with their rent and mortgages. Even keeping food on the table has become a challenge with grocery prices skyrocketing over the past year.

Previous economic stimulus packages have sent rebate checks directly to taxpayers. Most of this money paid directly to the people was simply forwarded onto creditors to pay down debt. So the previous attempts at stimulating the economy simply sent money into the pockets of the banks and credit card companies. The current stimulus plan does not contain any provisions to send money directly to the people, and the debt balance for most people continues to grow.

For a person with overwhelming debt, any stimulus received would be used to pay down that debt. Without the government’s help, many people are finding that they can create their own personal stimulus package by completely eliminating 100% of their debts from credit cards and personal loans. Instead of waiting for help, they are taking responsibility for their own financial future. Of course, personal responsibility is what this country was founded on.

Without debt, and without the monthly credit card payments, hundreds of dollars per month are saved on principal, interest and other fees. For some people, this can be thousands of dollars per year in savings. It could also be the difference between financial comfort and bankruptcy.

A debt elimination program is not applicable to secured debts such as mortgages and auto loans. Student loans and medical bills also do not apply. But without the credit card payments, extra money would be available to help pay for other obligations in life.

The debt elimination program is not for everybody. It is imperative that some time be set aside to understand just how and why the debt can be wiped clean. An elimination program is not bankruptcy, consolidation, or a home refinance. Having a basic understanding of the premise of the program will also remove any fear that someone has in regards to proceeding with this debt relief method.

A person does not need to become a lawyer to understand this process. You just need to be open to some unfamiliar information. This is time well spent considering the thousands of dollars of debt that can be eliminated. There is also no cost to obtain this understanding, for this is not secret information, just hard to find. You will not be spoon-fed this knowledge from our main information sources, such as television, newspapers, co-workers, and our parents.

By taking control of your debt, you will initiate your own personal economic stimulus plan. And you don’t need an act of congress to accomplish it. A little knowledge can set you free.

The Dinners Club credit card gave consumers limited credit
that, at times, even surpassed the personal savings of some
participants. It allowed them to buy items they usually
could not afford if they were to make a straight cash
purchase. It also provided the convenience and safety of
not having to carry large amounts of cash.

On average, American households possess 4 credit cards or a
total of 13 payment cards if debit cards and store cards
are included. There are, actually, 1.3 billion payment
cards of assorted types in circulation in the United States.

But, if you think that credit cards have made the lives of
modern American consumers easier, you may be wrong…

Statistics show that the average credit card debt for each
household in the U.S. is $4,800 per month. Also, there were
1.3 million credit card holders declaring bankruptcy in the
year 2003. This figure is almost guaranteed to decrease
since the change in bankruptcy law. A filer is required to
pay back a portion of their debt if they are financially
able. There are many other changes, mostly for the benefit
of the credit card industry and you can find more
information at:

http://credit.about.com/cs/legal/a/040601.htm

And if you still consider yourself unaffected by credit
card debt, then consider this: upon retirement, most
Americans can only expect to receive about 37% percent of
their annual retirement income because of prior debt
payment. This will leave many individuals depending on the
government, family and charity for economic survival.

These are some scary facts. So before you find yourself in
a position of economic uncertainty, it might be wise to
evaluate your spending and current credit card debt.

If your credit card debt exceeds what seems to be a
reasonable level, you may want to consider credit card debt
consolidation.

So what is credit card debt consolidation?

In a nutshell, credit card debt consolidation is taking all
your credit card payments and consolidating them into one
monthly payment. This way, you don’t have to worry about
managing the payments individually. Aside from this
advantage, it may also provide you with the following
additional benefits:

- Reduce interest payments
- Waive late and overtime fees
- Reduced monthly payments
- Debt relief in a shorter time
- Credit improvement
- Save more money in the long run

There are actually two major types of credit card debt
consolidation…

You may want to consider a Credit Card Counseling firm.
They assist consumers by consolidating all their monthly
payments into one single payment and then dispersing this
to the creditors on behalf of the consumers.

The other type is through a home equity loan or other
secured loan. This is done by exchanging an unsecured debt
(such as
credit card debt) for a secured debt (a debt backed by
specific assets such as real estate).

Now, credit card debt consolidation isn’t a magic balm that
will drive all your credit card debt malaise away. But, it
will make paying all your debt easier and might save you
money in the long run. Definitely an alternative worth
considering…

The best approach to adopt to eliminate credit card debt is to have your excessive debt discounted. Sometimes, credit card companies accept about 50% or less as payments for the debt if they are convinced that you are heading towards bankruptcy. So write a letter to the credit card company explaining your situation and how you intend to pay off the credit card debt. Including the point that you plan to file for bankruptcy, and intend to settle with willing creditors will compel them to agree with you, lest they be left with nothing!

When paying yourself out of debt, it is always better to pay the high-interest credit cards first. This means that if you have three credit cards, you could pay the minimum for the two cards with lower interest rate. If you allot $300 per month for paying credit card dues, you could pay $60 for two cards as minimum payment. You then pay $180 for the remaining high interest card. Then once one of the lower interest credit card debts gets covered, you pay only $60 to the remaining of the two and $240 to the high interest credit card. This way, you can pay off credit card debt quickly.

Switching to a credit card with a lower interest rate is a great way of eliminating credit card debt. There are many low interest credit cards in the market nowadays; some also offer introductory 0% interest for your first twelve months. Once you open an account in such a credit card company, you have to switch your balance to this 0% bank account. There will be no interest incurred in this account, and so the money you used to pay for interest could be used to pay the actual debt you have with the credit card company. These regular payments will help reduce your debt faster.

There is no point in only making minimum payments to your credit card payments. You have to pay part of the principle, and not only the interest when paying monthly installments. The more of the principle you pay, the lesser your interest turns out to be. You will feel the difference when you see your reduced credit card bills.

If all these fail, you can always turn to a credit card debt consolidation loan. Here you take a debt consolidation loan that will cover all your credit card loans. The credit card debt consolidation loan is usually of a lower interest rate, and can be paid over a longer period. The consolidator will first assess your financial position, and approach your creditors to negotiate for lowered interest rates, and a longer period to repay the loan.

The credit card company usually obliges to this as they prefer a small payment against no payment! Instead of you paying all the credit card companies their monthly payments, you just have to make a single payment to the debt consolidation company. It is up to them to disperse the money to your creditors. With this, you rid the hassles of facing your creditors every month.

1. Single not multiple debt

Credit card debt consolidation gets rid of multiple credit card debts instantly. This brings a welcome relief to the debtor who is plagued by multiple credit card repayment dates, juggling of APRs and various penalties.

2. End of harassment

Credit card debt consolidation brings an end to the threatening calls from debt recovery agencies. All the communication is now channeled via the debt consolidation agency, which takes care of all the harassment in a more professional manner and restores peace back in your life.

3. Professional negotiations on your behalf

Credit card debt settlement agencies, have seasoned professionals with extensive experience in negotiating debts with credit card companies. This ensures that your point is put correctly before the credit card companies and a well negotiated settlement is reached.

4. Reduction in overall burden

Credit card debt settlement companies not only club all your existing debts into a single debt, but they also do it so that you are able to pay it more easily and it reduces the debt burden significantly. This involves waving of late payment fees, reducing interest, making the loan a long term loan and reducing monthly repayment amounts.

5. Saves from bankruptcy and prevents severe damage to credit report

By taking a credit card debt consolidation, you get one more chance to repay your debts. Following the debt repayment schedule diligently will keep you out of the debt trap and ensure that the damaging effects of getting bankrupt do not arrive and malign your credit report.

Engaging a professional credit card debt consolidation agency ensures that you get the best deal. Once you have repaid all your credit card debts make sure that you don’t fall into trap of multiple credit cards again.

Credit card debt consolidation program offered by many debt consolidation companies and even the credit card companies themselves can be very useful in solving all your credit card debts. Following this program you can avail a credit card debt consolidation loan to erase out all your pending credit card debts. Especially when you are stuck up with many credit card loans it is imperative to get in touch with credit card debt consolidation program.

Many government schemes can also offer non profit credit card debt consolidation to aid helpless people who suffer from the clutches of the credit card debt collectors, whose constant harassments can be very frustrating and depressing to the credit card owners. The credit card debt consolidation program will erase all these difficulties of the borrowers. There can be only a few options left for a credit card debt like filing bankruptcy, choosing the right payment program for debt consolidation or go for credit card debt counseling.

Filing for bankruptcy is a very hard decision to make and moreover you will be blocked from getting any more loans or debts. Rather choose to get proper consolidation help. These credit card debt consolidation programs will help you to file a feasible consolidation plan wherein the credit card debt consolidation company contacts the credit card companies for your sake and even try to get a credit card reduction on repayments. You can easily repay your credit card debts by consolidating your loans into one easily payable loan.

The credit card debt consolidation program will offer valuable help to manage your budget, and your finances every month. Moreover, the loans offered charge very low interest rates and hence, it is very easy to pay them back every month without feeling the extra pinch in your monthly pay slip. Don’t hesitate nor wait to think twice before you choose a consolidation program. Every moment counts as the debt interest rates shoot up every day. Don’t wait to consolidate act now.

Everyone today is worried about credit card debt, but in most cases, they don’t have a clue how to do anything about it. In fact, for most people once they get into debt, they don’t have a clue how to get out again. In fact, for most of the population, it’s much easier to get into debt than it is to get out of it, especially with credit cards. Out of all the debt in our society, credit card debt is the major cause of bankruptcy and debt management plans.

The Effects

How does it begin? Unfortunately banks play a large role in the high credit card debt that many consumers are carrying. With lucrative offers of low interest rates that expire after a year with no annual fees to rewards card that have everything from free flyer miles to cash bonuses, cardholders snap these cards up in a hurry in order to be able to take advantage of the many bonus offers. The bonus offers are the beginning of what will later culminate into a financial disaster. Unfortunately, many of these offers are targeted at young peoplenew high school graduates, college students, and recent college graduateswho are not yet emotionally mature enough to understand the importance of having good credit or even how to handle a credit card. With this early lack of knowledge about credit cards comes a future of financial chaos.

Sadly, many people do not realize the effects of too much credit card debt until they are in so deep that they don’t see a way out. For many, the most classic sign of having too much credit card debtonly being able to afford to make minimum paymentsdoes not stand out as a problem. It isn’t until sometime later that the real effects of excessive credit card debt begin to materializemissed payments, inability to afford even minimum payments, credit lines at or above established credit lines, and borrowing from one card to pay payments on another card. Sometimes those in serious credit card debt will apply for another credit with a higher limit and lower interest rate with the original intention to get rid of the other cards and use the new card. Some may even take out a consolidation loan, and after the balances are paid on their credit cards, they start using them again instead of getting rid of them. For some the reality does not hit home until the bill collectors are knocking on the door, the judgments are issued, and they attempt to apply for a loan only to find that their credit is so severely damaged that they can’t even borrow a few hundred dollars to buy some furniture.

The Solution

Once you have gotten into severe financial trouble with your credit cards, the next step is to devise a plan to eliminate the debt and get back on your feet. There are several plans you can utilize depending on the severity of the damage. Following are some solutions beginning with a program for the debtor who has done the least amount of damage and ending with the most severe cases.

* If you are one of the lucky ones who becomes aware of financial issues before it gets totally out of hand, it’s much easier to solve the problem. One of the easiest ways to pay your credit card debt if you are still at a reasonably manageable level is to take the credit card with the lowest balanceor highest interest rate if all the balances are close in valueand add some extra funds each month. Even if it is only $10-15, anything above the minimum payment will help the balance reduce quicker. How so if you are only paying an extra $10-15 a month? Here’s how: when you pay off that first credit card, take ALL of the money you were paying on it, and add that to the minimum payment on the second highest balance or interest rate card. In other words, if you were paying a total of $50 a month on Credit Card #1, when you pay it in full, add that same $50 to your payment on Credit Card #2. Follow this same process until all of your credit cards are paid in full and refrain from using them other than an extreme emergency (car or appliance not working, medical bill, medicine for illness), and do not under any circumstances use the one you are in the process of paying in full. If you have more than two cards, get rid of the except any used solely for business.

* Another outlet you may want to use is a consolidation loan. Of course, in most cases you will need to own real estate to obtain a consolidation loan. This will give you a longer term and lower interest rate, but you must be careful if you’re using your home as collateral. When you have paid the cards in full, cut them up or lock them away until you finish paying off the consolidation loan. Some people make the mistake of obtaining a consolidation loan, only to begin using the cards again and create the same financial situation from which they just evolved.

* Some card issuers have a program where they will lower the interest rate and payments, but if you have several cards, this program may not work well for you. If you miss one payment, the program becomes null and void, and you are right back to where you were.

* Debt consolidation involves working with a debt management company in order to develop a repayment schedule. They will work with your card issuer to obtain a lower interest rate, and sometimes eliminating the interest rate totally, to allow you to make one payment to the debt management company that will distribute the payments to your credit card companies.

For those who waited too long to do something about their situation, bankruptcy may be the only answer. That is a step you want to avoid whenever possible, so unless you have extenuating circumstances, recognize the extent of your financial situation before it’s too late to work with your creditors.

But the options seem limited; you probably think that it’s almost impossible to make your paycheck stretch enough to get a handle on all of your debt. It can be easy to let credit card debt take over your life – don’t let it! Whether you had an accident and had to live off of your credit cards for a few months, or just weren’t smart with your debt, there are ways that you can control your debt and pay it down – without asking your boss for a 50% pay raise! Here are the best tips for credit card debt consolidation:

* Put down the credit card: It may seem like common sense, but if you’re still charging purchases, you will never escape your credit card debt. Hide your credit cards and use your debit card to make your everyday purchases – you’ll soon spend well within your budget!

* Cut down on luxuries: Do you eat out for lunch everyday? Do you absolutely have to have that four dollar latte every morning? Luxuries like these are exactly that – luxuries. When you’re trying to get rid of credit card debt, you have to give up a few unnecessary luxuries. Try bringing your own coffee to work, or make lunch at home. The peace of mind you’ll have once your debt is gone will definitely be worth it.

* Look into a balance transfer: If you’ve been carrying a hefty balance on your credit cards, you may as well be flushing fistfuls of cash down the toilet. When you carry over a balance on your card month after month, your interest rate skyrockets, which puts even more pressure on your wallet. Consider a balance transfer to a low interest rate credit card, which will help save you hundreds of dollars in interest; not to mention make it much easier to pay down your credit card debt.

A balance transfer is a viable option for many individuals, but a warning about low interest rate cards: make sure that you’re not buying into an introductory offer. It can be a real kick when your down if you see your credit card balance shoot up once the balance transfer offer period ends!

* Try consolidation loans: Many banks will offer you private debt consolidation loans to help you pay off that credit card debt. But make sure you’re not charging anything to your cards while paying off the consolidation loans, as you’ll just be digging a deeper financial hole.

* Make extra payments: Many people pay only the minimum payments on their credit cards, but this prolongs the life of your debt – not to mention the hundreds of dollars that you’re throwing away on interest alone. Pay more than the minimum payment, or if you can, make small extra payments throughout the month. You’ll see your debt shrink in no time.

Here’s another tip for making extra payments: use the money you previously spent on unnecessary luxuries towards your credit card debt. For example, if you spent four dollars a day on your large coffee for a month, that’s $120…for some people, that’s like another credit card payment! If you budget your monthly expenses based on what you need – not what you want – you’ll find the money to make those extra payments.

* Dip into your savings account: This suggestion may seem a little shocking, but if you’re drowning in credit card debt, it’s worth dipping into your savings to alleviate the debt. However, if you can possible avoid it, try not to cash out your 401(k) or any other retirement savings you may have.

* Borrow against your life insurance policy: If your life insurance has cash value, borrow against the policy. Again, this suggestion may seem a bit shocking, but you need to get rid of that credit card debt! However, make sure you pay back the loan, as any leftover debt will paid off by using part of your policy. This may seem insignificant now, but your grieving family will thank you for it.

* Get a home equity loan: If you’re a homeowner, and have accumulated equity over the years, consider a home equity loan (HEL) in the amount needed to pay off your credit card debt. Home equity loans often have lower interest rates than those of credit cards, so you’ll be trading off your debt at 18% interest rate for one at 6%. Just using this method you’ll find you have extra cash to pay your debts off.

But before you take out a home equity loan, make sure you’ve learned your lesson regarding credit card debt. Don’t take out a loan, and then continue to use your credit card to make purchases – you’ll only further bury yourself with debt.

* Talk to the credit card companies: After all, they’re human too! If it seems like you’ve tried everything to get your debt under control, with no success, try taking your case to the credit card companies. Let your creditors know your situation. Maybe you still haven’t recovered from that accident, or you had a huge unexpected purchase to make; regardless, ensure you mention the word bankruptcy in the conversation. The last thing credit card companies want to lose is their money, so they’ll often renegotiate your interest rates and debt balance in order to protect their assets.

* Go to credit counseling: Credit counselors are often a great resource for consumers looking to reduce their credit card debt, as they can help cut down your debt balance by more than half. This is often the last step taken by individuals before declaring bankruptcy, and one of the most successful.

If your stressed out and it seems like you are up to your eyeballs in debt then don’t panic, it is possible to get yourself out of debt without working 3 jobs or going bankrupt. Just follow these tips, and you’ll be debt-free in no time; but beware! Make sure you’ve learned your lesson, or else you’ll repeat the debt cycle again and again.

Everyday, we hear the news of the debated economic stimulus package. We sit back and wonder how this will directly help us. Each of us has a unique perspective on the stimulus, and we all have different needs for where, when, and how the stimulus may or may not personally help.

Previous economic stimulus packages have sent rebate checks directly to taxpayers. Most of this money paid directly to the people was simply forwarded onto creditors to pay down debt. The current stimulus plan does not contain any provisions to send money directly to the people, and the debt balance for most people continues to grow.

For a person with overwhelming debt, any stimulus received would be used to pay down that debt. Many people are finding that they can create their own personal stimulus package, without the government’s help, by completely eliminating 100% of their debts from credit cards and personal loans. They are taking responsibility for their own financial future, instead of waiting for outside help. Of course, personal responsibility is what this country was founded on.

Without debt, and without the monthly credit card payments, hundreds of dollars per month are saved on principal, interest and other fees. For some people, this can be thousands of dollars per year in savings. It could also be the difference between financial comfort and bankruptcy.

Secured debts such as mortgages and auto loans are not applicable to the elimination program. But without the credit card payments, extra money would be available to help pay for other obligations in life.

The debt elimination program may not be for everybody. It is imperative that some time be set aside to understand just how and why the debt can be wiped clean. An elimination program is not bankruptcy, consolidation, or a home refinance. Having a basic understanding of the premise of the program will also remove any fear that someone has in regards to proceeding with this debt relief method.

A person does not need to become a lawyer to understand this process. You just need to be open to some unfamiliar information. This is time well spent considering the thousands of dollars of debt that can be eliminated. There is also no cost to obtain this understanding. This may be “hard-to-find” information, but it’s not top-secret. You will not obtain this knowledge from our main information sources, such as television, newspapers, co-workers, and our parents.

Assuming control of your debt will initiate your own personal economic stimulus plan. And you don’t need an act of congress to accomplish it. A little knowledge can set you free.