Continuing on our financial management theme, today we will talk about the different ways you can eliminate credit card debt.
Credit card debt is a huge burden for most families. According to a recent CNN story, the average American household with at least one card this year has nearly $15,950 in credit card debt. Some credit cards have annual interest rates of 15-29 percent, so most Americans are making payments on interest alone, which continually adds up. You can chip away at your dept, however. Here are some methods available:
- Credit counseling: There are many for profit and non-profit credit-counseling programs out there. Make sure you study them before you choose to join one. A legitimate program will put you in touch with a counselor who will review your income and debts and try to setup a debt management program with you and your creditors.
- Debt settlement programs: Debt settlement programs often promise their costumers that they can settle their debt for 50-70 percent less than the balance on their cards. But beware; settlement companies often take large fees for their services. They also encourage people to deposit money used for settlements with banks they have deals prior to any payments being made towards a debt, and you could end up in a worse situation than you are in now. In 2006, the Better Business Bureau received 86 complaints nationally regarding debt settlement companies. Five years later, the number skyrocketed to 5,385. The Federal Trade Commission says debt settlement programs “can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit.”
- Balance transfers: If you have a high interest credit card and one with a lower interest rate, you may be able to transfer the balance of your high interest card to your lower interest line of credit. You can also look for offers from carriers that have 0 percent balance transfer fee rates for introductory members. However, if you already have financial issues or issues with your credit score, it’s very hard to get these offers.
Often, the best option for people facing substantially high credit card debt is bankruptcy. The programs mentioned above can work for some people—however you’re still going to be responsible for payments. Through a bankruptcy, your credit card debt can be discharged.
Talk to our attorney about what bankruptcy can do for you. If your financial situation is a problem, contact our Washington DC and Maryland bankruptcy attorney now for a free consultation.