In the current economic scenario many people are running up increasing number of debts, particularly on their credit cards. Many more than ever before have found themselves in a position where their debts are simply not manageable by merely paying back their monthly credit card bills.
If you have multiple credit cards it is worth moving as much debt as possible onto the card you own with the lowest interest rate, this way you will be paying back less every month. Should this not be an option it may be possible to apply for another credit card, with a lower interest rate and a big enough credit limit to cover your debt, and transfer all your current debt onto this card. If you proceed with this option, look for a card that offers 0% balance transfer to avoid any extra charges. Lastly, look out for any cash back offers. In case you are applying for another credit card, these can help even further when it comes to paying off your debts.
Transferring credit card debt to other credit cards is an option, only if you have a good credit rating. While getting another credit card will not negatively affect your credit ratings, unless you default on it, however, the chances of getting one will depend entirely on your previous credit history. And more often than not, in cases of large debt, credit history will not be great.
Debt consolidation loans are another option available for those looking to lump all debts together into one lower monthly repayment. There are number of firms offering these services but I would recommend looking for a reputable company that provide a number of financial services, these companies usually have the lowest interest rates and the most flexible repayment methods.
Consolidation loans have far lower interest rates than credit cards and are usually more helpful when it comes to clearing large debts. Also, unlike a bank or a credit card company, providers of debt consolidation loans are less likely to reject your application based on any factors other than your ability to pay the loan back or secure it against collateral.
Collateral, in case of secured loans, usually means property owned by the loan applicant – this is why they are often referred to as homeowner loans. Be aware that defaulting from this type of loan will almost inevitably result in the loss of your home. Therefore, be sure you are capable of making repayments.
Remember there is no debt so large that doesn’t have a solution and worst case scenarios such as insolvency agreements can be avoided by taking steps like the ones above. Finally, the first step to becoming debt free is to find a solution and stick to it.
Author: Kevin Ball
He writes on financial topics.