Credit Card Debt Solution
While there is no one size fits all credit card debt solution, there are several options available to help reduce your debt.
Let's take a look at several solutions that may be right for you:
Debt Consolidation Loans. These are loans offered by banks. In essence, you can take all your credit card debts and consolidate them into one large sum. Generally, debt consolidation loans will help in a number of ways; firstly, they tend to have lower interest rates than those the credit card companies offer; secondly, your monthly payments tend to be lower; and thirdly, debt consolidation loans leave you with only one payment a month- thereby reducing your chance of forgetting to pay one of your credit cards on time.
Another option is to refinance your home, or take out a home equity line of credit (HELOC). Either of these options are a credit card debt solution, but should only be considered if you are certain you can afford the payments. Why? These types of loans are secured by your home, which means the creditor can take them if you miss payments. While most lenders only seize an asset when absolutely necessary, a few unscrupulous ones look forward to it. Don't give them the opportunity!
A third solution would be to borrow money from your retirement plan. For most people this is called a 401(k) or 403(b). You can borrow against your retirement account, and as long as you pay it back within five years you don't owe any penalties. However, if you fail to repay the balance in five years, the IRS will slap you with a ten percent penalty and declare the balance as earned income for the year- making for a nasty surprise on tax day.
These three credit card debt solutions are not right for everyone, and you should contact a credit counseling agency or CPA to help determine which is right for you. All three methods are solutions, and can help pay off your debt so long as you understand the fine print and are able to make the new payments on time and in full.
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