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By Charles
Essmeier
Studies show that Americans are now saving less than ever before. Along with
that, Americans are carrying a heavier debt load than ever. It’s easy for a
home loan, a car loan and a few credit card bills to get out of hand, and
many people are struggling with more debt than they can easily pay. To make
matters worse, new bankruptcy legislation will make it harder than ever to
file bankruptcy for those who simply cannot pay their bills.
There are a number of solutions available that allow most people to reduce
their interest rate on their debt, reduce their total monthly payment, or
both:
Ask for a lower rate on your credit card. If you have been making payments
regularly, and you haven’t had a history of late payment, you may be able to
lower your interest rate on your credit cards simply by calling your credit
card company and asking them! It doesn’t always work, but the market for
credit cards is pretty competitive these days, and many lenders would rather
lower your interest rate than lose you as a customer. It’s worth asking.
Get a new credit card. If your lender isn’t willing to lower your rate, shop
around for a credit card with a better interest rate. There is no reason to
be paying 20% or more in credit card interest if you don’t have to. The
interest on credit cards is not tax deductible, but if you can get a credit
card with a lower interest rate and you move balances from other cards to
that one, you can save quite a bit.
Take out a traditional bank loan with collateral. You can probably obtain a
simple installment loan from your bank by putting up cash or investments as
collateral for the loan. Like credit cards, the interest isn’t tax
deductible, but the interest rate may be better than credit cards, and if you
consolidate several payments into one with a bank loan, you will lower your
monthly payment.
Take out a home equity loan (http://www.homeequityhelp.net/>home) or home
equity line of credit. If you have equity in your home, you can borrow up to
80% of your equity in either a lump sum or a revolving line of credit.
Interest rates are still quite low on home loans, so this one could be a good
way to consolidate your debt. As a bonus, the interest is tax deductible. A
minor downside is the fact that these loans usually have application fees and/
or closing costs.
Most people can utilize one of the ideas above to help them reduce their debt.
If none of these options work for you, you should consider speaking to a
credit counselor, who can outline other options that may work for you. Many
credit-counseling agencies are non-profit, so it may be worth your while to
talk to a credit counselor if nothing else will work.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including End-Your-Debt.
com, a site devoted to debt consolidation (http://www.end-your-debt.com/
>debt) and credit counseling, and HomeEquityHelp.net, a site devoted to
information regarding home equity loans. (http://www.homeequityhelp.net/
>home)
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