Credit Card Debt Relief
Here is a comparison of your credit relief options and how you can choose between them
When you feel like your debt has grown to a point where you feel you can’t keep up, it’s time to explore your options. Bankruptcy or debt settlement will mean that you only pay back a portion of your debt, and your credit score will reflect that in a negative way. If you’d rather pay back your debt in-full, there are options to help you do that and get your personal finances back on track.
If you are feeling overwhelmed or confused by debt and debt relief options, call and let a trained credit counsellor guide you. They can assess your current financial situation and offer you free personalized advice. You can also get started online by trying our Free Debt Analysis.
What are my options for credit relief?
Debt relief includes any debt solution that allows you to make your credit card payments more manageable for your monthly budget. In some cases, you may be able to simply negotiate a lower interest rate with your creditor. This means that more of what you pay will go towards your credit card debt instead of interest so that you can pay it off faster..
However, even if you are successful in lowering your interest rate, it might not provide enough impact or it might be too short a period to help get you out of debt. If your monthly debt payments are just too high, you will want to try other options so that you can shrink your payments down to an amount that will fit your monthly budget.
Here are the most common ways:
Balance transfers. If your credit card debt has not yet made significant damage to your credit score, you might be able to find credit relief simply by transferring the balances from one or more of you high interest credit cards to a credit card with a much lower interest rate. You will need a strong credit rating and make sure you check your credit card contract to see if there are any fees involved.
Debt consolidation loans. Like balance transfers, debt consolidation loans are a do-it-yourself credit relief option that generally requires a strong credit score. You consolidate multiple unsecured debts (such as credit card debt) into a single monthly payment. If you have a high enough credit rating, you can obtain an unsecured debt consolidation loan at a lower interest rate. You may also qualify for a secured debt consolidation loan, such as a home equity loan. They may offer lower interest rates but you could be in danger or losing your home if you fall behind on your payments.
Debt management programs. A debt management program is another way to combine your debts into one monthly payment. You can enroll through a credit counselling agency which intervenes on your behalf with your creditors. Your interest rate and payment will likely be lowered because the credit counselling agency is representing you. Qualification for this option is based on your ability to pay a lower payment, not your credit score..
Choosing the right credit relief option
Your own unique financial situation will have an impact on your choice. A number of factors will go into your decision, including:
- How much unsecured debt do you have?
- What types of unsecured debt do you have (i.e. credit cards, student loans, tax debt, other unsecured lines of credit)?
- Have you been late or missed payments on your debt?
- If so, and your accounts are delinquent, how long have they been that way?
- What is your credit rating?
- Do you have a steady monthly income? What is your household budget?