How to Get Out of Credit Card Debt

Dec 3, 2010

The most common issue among the consumers are making late payments and getting dunning notice from the creditors. There are several reasons for being financially strapped like losing of job, over expenses or emergency financial issues related to family.

Due to the high interest rate on the credit card that varies between 10%-30% APR, the repayment plan becomes more expensive. And prolong payment of the minimum balance along with the mounting APR charges on the outstanding balance would make it overwhelming.

What are the possible ways to get out of credit card debt?

1. Avoid paying minimum balance:

If you pay off the outstanding amount each month then it would be easier to get out of debt. Paying only the monthly minimum balance would prolong the repayment plan. And the accruing interest rate on the outstanding amount would make it unfordable for your pocket. The credit card companies lure the consumers with a bait of minimum balance payment. These companies trap the consumer into the maze of debts therefore go for a credit card debt settlement program in order to come out of debt.


2) Design a budget to avoid debt:

Preparing a budget helps to curb your reckless expenses as that would help you to avoid debt. Unless you pay off your existing debts it would not be possible to design a budget. In order to avoid the debt trap prefer changing your mode of expenditure. You need to redesign your budget plan if your expenses exceed your income. On failing to take proper measures might place you again in a severe debt problem.

3) Take up loan against 401(k) plan:

You take loan against any investment plan in order to pay off the debt. The interest rate on these loans is 1-2 points higher than the average rate. But when interest rate of the other loan is compared with the card interest rate the former appeared to be cheaper. But there is a negative aspect to it in case you plan to change your job. This debt takes 5 years to pay off but switching jobs gets the debt transferred into due. On failing to pay of the amount would be treated as taxable due that would be charged with penalty fee. If you are planning to change your work place then pay off the loaned amount immediately.

4. Hire a financial advisor:

Hiring a financial advisor would help to give you a quick relief from the mounting debts. This advisor helps to negotiate with the creditors on your behalf. He often restructures your budget plan according to your current financial situation. The financial advisor leads you towards a debt free life while giving a new meaning to it.

5. Try to settle with the creditor:

On giving a valid reason and explanation would help you negotiate with the creditor. You can settle the owed balance along with the interest rate that would make the repayment plan reasonable. If your creditor doesn’t agree with the settlement amount then threaten him of declaring bankruptcy. He would fail to retrieve the amount if you file bankruptcy therefore he might agree with the terms of negotiation.

These are the simple ways to get out of debt with ease and that would help you to achieve financial liberation.     

This article has been written by Angela Sanders. She is associated with Oak View Law Group, a trustworthy debt settlement firm.

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