Eliminate Credit Card Debt
By
Easy Tips
—
Monday, 16 July 2018
—
Credit Tips
If you have borrowed from one credit card to pay back another, this will put you even deeper in debt and make your debt even harder to pay off. Before going any further, you should consider a debt consolidation loan to help you with your task. This plan will allow you to combine your debt and make just one LOWER payment a month. With spending on the rise in America, and income levels staying the same, many people find it hard to meet their monthly bills.
If this situation continues, we are headed for big trouble. People in this situation should consider a debt consolidation loan to help them out of their nightmare of debt piling up faster than they can repay it. Debt consolidation programs can help you lower the interest on your high interest debt. Debt consolidation loans come in many different forms to make it easier on you.
If you own a home, you may qualify for a home equity loan to consolidate your debt. This type of loan is considered a secured loan by your home and even though the interest rates are low, if you can't make the payments, the lender who gave you the loan will foreclose on your home. Your only other option is to search for an unsecured loan, but these tend to have a higher interest rate than any type of equity loan you may get.
A personal loan may also be obtained to help you with your debt consolidation. Make sure you read the fine words that contain the terms and interest rate for the loan. Normally the interest rate on a personal loan will be determined by your credit score and may vary from lender to lender. There are sources available online so that you may easily apply for more than one loan to find out which one offers the best interest rates for you.
And if you're just starting out in the debt collection business then you're likely to have greater success if you narrow your focus and not consider loans of a broad spectrum. You'll probably also find that you're able to make a profit faster when you take this approach. One example of a loan broker is the NLEX (National Loan Exchange Inc). It is the "leading source of debt portfolios on the web".
However, to be able to view any of the loans that are currently for sale you have to register with the site and you have to complete a Buyer Confidentiality Agreement and a Buyer Verification Form. Your account will not be enabled until you've submitted all the required information. 100 billion dollars of debt and so have a wealth of experience in this area and is a highly reputable company. Therefore, if you're considering making money from credit card debt (or other forms of debt) then it's worth your while to register with the NLEX.
Mounting credit card debt is never desirable. A person should be able to pay at least the minimum balance. Missing even a couple of payments will result in increasing the interest rate by as much as 30%. Moreover, if a person defaults on one credit card, it would increase his interest rates on all credit cards.
What is Debt Consolidation, Debt consolidation is the process of replacing many loans with a single loan that carries a lower rate of interest. This is done through debt consolidation agencies, which negotiate with the creditors and bring down the outstanding amount, in addition to providing finances at a low interest rate to help pay off a multitude of loans. Most credit card companies are willing to work with a client, and help him consolidate his debts, rather than turning over the debts to a debt collection agency.
Transferring the Credit Card Balance to Another Credit Card: A card with a lower rate of interest or one with 0% introductory APR can free up funds, which can then be used to pay the credit card debt. Transferring the balance to a credit card which carries a low rate of interest is possible only if a person has a good credit rating. For others, 0% introductory APR may help them save money on interest for a period of 3 to 6 months.
Of course, after the initial 0% introductory rate, a person would be expected to pay a higher rate of interest. Using the Equity on the House: A person can borrow against the built up equity on the house. Built up equity is the difference between the market value of the house and the remaining mortgage balance. This is possible only if the slump in the housing market has not resulted in a negative equity on the house.
A person can borrow either a home equity loan (HEL) or a home equity line of credit (HELOC) using the built up equity. This results in converting the unsecured credit card debt to secured debt, the collateral being the house. A person should ensure that he pays the interest on HEL or HELOC, otherwise, he is at risk of losing his home. Borrowing form 401(k): This might not be a bad option, since borrowing from 401(k) does not result in penalties.
A person is expected to pay a low rate of interest, and the interest paid is credited to his 401(k) account. However, he should ensure that he pays the interest on time, since defaults are reported to the IRS, and a person would have to pay a penalty on any outstanding 401(k) loan.
Borrowing from Insurance: This is an option for people who need a loan which is less than the cash value of their policy. In case the amount of loan exceeds the cash value of the policy, the beneficiaries will not be entitled to death benefit. Hence, one should try and replenish the policy as soon as possible.
Refinancing the Mortgage: This is a good option for a person who was paying a fixed rate of interest on the mortgaged house. Such an individual will definitely benefit by refinancing the house, since interest rates have dropped significantly. Home refinancing is the process of using the same house as a collateral in order to obtain a secured loan. This loan which is provided at a lower rate of interest, can help a person consolidate credit card debt. Credit counseling services can provide tips on debt management and help a person consolidate his debts. They are essential for a person struggling with mounting outstanding payments.