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Ways To Reduce Credit Card Debt

Author: Alice Shown

If a person continuously fails to pay his bills, he will incur a huge amount of credit card debt. Ignoring the bills and avoiding payments may also drive the person to declare himself bankrupt. According to a recent survey, the Federal Reserve has reported that the overall consumer borrowing in the US is down by $3.34 billion. As a result, there is an increase of $ 1.65 billion in the non-revolving credit side. This is because consumers are working hard to get their personal finances back to track and avoid going bankrupt. Bankruptcy is not a healthy practice as it hurts the credit score really hard! So, to escape from this financial mess, many people are taking refuge in the various debt relief options.

How to reduce credit card debts

The methods which help a person to reduce his credit card debt are as follows-

1.Consolidation: This method consolidates all multiple unpaid credit bills into a single new loan, at a lower interest rate. The loan term becomes longer and collateral, like car or home is required, for the security of the loan.

2.Counseling: One can opt for counseling to get financial advice by professional advisors. They help the borrower to prepare a budget, on the basis of his monthly income and expenses. They will also provide advice in choosing the best option to get rid of the financial obligations.

3.Settlement: In this program the settlement company will do negotiation with the creditors, on behalf of the borrower. They will try to reduce the outstanding debt amount by 40% to 60%. The borrower needs to make a monthly payment to the settlement company. When the amount will accumulate into a lump sum, it will be paid to the creditors.

4.Debt reduction: In this program, the credit counselor negotiates with creditors to reduce the outstanding balance. In this case the borrower needs a guarantor, who will agree to pay the creditor, in case the former fails to pay. This is also known as third-party debt negotiation.

5.Debt relief: In this program, the agency negotiates with the creditors. They will try to lower the interest rate and the debtor may have to close his credit account and cannot use any credit card of that particular company in the future.

Article Source: http://www.articlesbase.com/debt-consolidation-articles/ways-to-reduce-credit-card-debt-3639039.html

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To know more about various credit card debt relief options, check out Superiordebtrelief.com. Their experienced counselor will help you in choosing the best option to give you a financially stable future.