Debt management is an important aspect of personal finance, especially in these times of economic difficulty. In this article, we will focus on how to lower your credit card debt and some dos and don’ts while choosing a debt relief program.
As consumers, we need to know some important facts about the debt relief industry. The first point is that more than half the agencies, people, and so-called ‘very’ knowledgeable experts, are frauds who will simply charge you an outrageous amount in return for empty promises, that they will get your debt volume reduced. The following guide will help you identify a trustworthy program.
Guide to the Best Debt Relief Programs
You may require some guidance and tips, for which you can turn to the following sources:
- The best source for information is the Federal Trade Commission, which not only publishes information on its website, but also helps you reduce debt in all possible ways. Few of the popular activities organized by the Federal Trade Commission are workshops, lectures, and conferences about debt relief and how one can avail this facility.
- Secondly, you can take up what is known as a Christian debt relief, a nonprofit organization that is usually arranged by the Church or a Church-affiliated agency. This program is the safest of all and you will be guided in the most positive manner. Such programs also help you in getting reliable debt consolidation loans.
- Thirdly, the Federal Trade Commission (FTC) has put forth compliance standards for all such debt relief programs. Therefore, a program fulfilling FTC compliance standards is reasonably good and reliable.
Steps for Lowering Credit Card Debt
Here are a few steps that you can take, in order to bring down the level of debt:
Credit Counseling
Most of us do not know how the credit ratings and credit cards work. There is some simple math involved in calculating the rate of interest. Understanding this mechanism will help you to pay off the debt quickly.
Stop Credit Cards
The next step is to phase out the use of credit cards. Gradually, stop all those cards, whose credit limit is under-utilized and those that have a high APR. Reorganize your credit cards and even the loans. In this reorganization, ‘take everything possible and give nothing back’ which means to keep the low interest or fixed APR cards and block or stop all those cards that have unreasonable terms and conditions.
Debt Settlement
Next, make a pro rata or proportionate allotment of all the debts you have incurred. If you pay back in proportion, then your credit score will not come down drastically. Several agencies would offer to do a debt settlement for you. However, it is recommended that the agency’s credentials are verified before signing up for the same. Make sure that the agency is in compliance with the FTC guidelines.
Debt Consolidation
As a last resort, debt consolidation loans are also useful. Such loans would help you to pay off the debt instantly. You would then have to pay off the long-term debt by taking up a small set of low interest installments. Several recognized banks provide such loans. Again, it is better to avoid private loans as there is a possibility of being a victim of high interest rates.
Dos and Don’ts
What to Avoid
Debt negotiation is one proposition given by several agencies. Under this scheme, the debt is negotiated with the credit card company in exchange for a fee. This is possible in some cases, but to a very limited extent. Usually, credit card companies would not be willing to cancel or forgive the money that you have borrowed from them. The most they can do is to bring down your APR. But you can do this on your own, in a much more convincing manner and with better results.
All you need to do is give the consumer cell a distress call. Also avoid believing in rumors such as Obama Credit Card Debt Relief. It’s a public misconception. The Obama administration has merely sought more transparent practices through the Credit Card Accountability Responsibility and Disclosure Act of 2009; however, there is no relief or forgiveness.
What you can do
If you need help in getting out of credit card debt then there are a couple of things that you must do. A government debt relief program would do just fine, as such programs provide guidance for Do-It-Yourself (DIY) debt relief. The accumulated debt always seems like a mountain to climb; however, if you take up a systematic approach then you can pay off your debts quite easily and systematically.
Paying off any kind of debt should ideally be done on your own due to the fact that nobody knows your own debt better than you, yourself. There are several relief agencies that will charge you a great deal of money and yet, do not promise you anything. In several cases, the debt is actually never brought down substantially. It’s reduced by an insignificant percentage.
Disclaimer: This article is for reference purposes only and does not directly recommend any specific financial course of action.
