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Thursday, April 9, 2009

Credit Card Debt - Troubling you?

If you’re carrying several credit card balances, it’s almost always wise to consolidate them. You can opt for a home equity loan, which will drastically reduce the interest rate and probably get you a tax deduction. Be careful that you don’t overborrow though, because you are risking your home by opting for a loan. You should also avoid creating new debt while paying down a home equity loan.

If you’re not comfortable borrowing against your home to pay off credit card debt, then a balance transfer is the next best option. These offers usually have a very low interest rate for a limited time. Pay as much as possible toward the consolidated debt every month. If you have a 0% transfer for 12 months, then 100% of your payments will go toward the debt rather than the interest. For many people, this is a significant savings and allows them to finally get out of debt.
Finally, if you can pay off your credit cards in less than six months, then consolidating is probably not necessary. Although it may save you a few dollars in interest, the transfer fees may cancel out any savings.

If you’re tired of receiving numerous bills and want to streamline your financial life or save money, then consolidation is usually a very good way to do both. Before you opt for consolidation, carefully consider the costs and benefits and then make the best choice for your situation.

I have been looking at some debt consolidation companies and Freedom Debt Relief seems to be top of my list.

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