What to Do About Credit Card Debt
Recent statistics from the Federal Reserve show that if you add up the credit card bills of every cardholder in America, the total would amount to nearly two and a half trillion dollars. It's no wonder that so many Americans seek debt relief, especially when faced with health emergencies or unexpected job losses.
A decade ago, some consumers may have sought debt relief from small credit card bills by holding their breath and waiting for a charge off. Today, 'default clauses' have been included in the fine print of most credit card bills. These clauses allow lenders to drastically increase interest rates if they notice a recent late payment on a borrower's credit report. Therefore, paying all of your credit card bills on time has never been more important.
At the first sign that you might not be able to cover your monthly credit card bills, seek advice from a non-profit debt counselor affiliated with the National Foundation for Credit Counseling. An impartial counselor can examine your spending habits and recommend strategies to pay off your credit card bills sooner. For example, you can often apply to stop payments on your student loan debt for up to two years without the penalty of student default.
If your debt situation is more dire, you may be able to use loan consolidation to roll all of your current credit card bills into a single, lower, monthly payment. Homeowners can easily accomplish loan consolidation by taking out a home equity loan and paying off credit card bills. Loan consolidation might carry a slightly higher interest rate for non-homeowners, but a growing number of lenders offer this kind of debt loan program.
The loan consolidation process can reduce your monthly credit card bills and help you to get your financial life back on track. Debt experts recommend that you cut up all but one emergency credit card after loan consolidation to avoid the temptation to run up another round of unmanageable credit card bills.Sources
National Foundation for Credit Counseling