Amidst tough credit crunches, individuals tend to resort to filing for bankruptcy. However, doing so affects one’s creditworthiness to a great degree and restricts the ability to acquire further credit. One can instead seek out the various credit card relief programs. These are an excellent means of reducing the burden of debt and establishing a fresh credit slate.
Credit Card Relief: Options
The common credit card relief alternatives include:
Credit Card Debt Settlement
This involves negotiating with the credit card companies for reducing the total amount of debt. An aggressive credit card settlement program can help to become debt free in a fraction of the stipulated period. However, this option should only be resorted to while facing bankruptcy or during unrecoverable debt scenarios, as it leads to degradation of one’s credit worthiness.
Credit Card Debt Consolidation
This involves merging different loans into a single card or line of credit, which has a fixed or a lower interest rate. Debt consolidation helps to acquire better interest rates and lower monthly payments. Moreover, it facilitates easier debt management as one need not worry about multiple sources of credit. Some options for credit card debt consolidation are:
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Home equity loan: A credit card holder can apply for a low interest home equity loan to pay of all the credit card outstanding in one go. However, this has a downside in that if a cardholder fails to meet the payments, his/her home may be repossessed.
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Low-interest personal loan: A cardholder can also acquire a low interest personal loan to pay credit card debts in lump sum and manage a single loan, without worrying about repossession. However, an individual needs to have reasonable creditworthiness to qualify for a personal loan.
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Card balance transfer: A cardholder can transfer debts into single low interest or 0% interest credit card. By making larger payments on this card s/he can ensure greater credit card relief and faster debt settlement.
Managing credit card debts can be a perplexing task. However, there are a large number of credit counseling companies that help with the process. A credit counseling service reviews the debts and income-expenditure structure and determines the most suitable plan accordingly. They facilitate credit card relief by negotiating with the creditors for reducing the interest rates and fixing a specific monthly payment.