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4 Simple Steps Toward Credit Card Debt Relief

Dec 25, 2007
More and more consumers are increasingly finding themselves tied down with more debt than they can handle. If you are one of these people, here are 4 steps you can take today to get some relief from your credit card debt:

1. Always pay your bills on time. Most consumers already know that one or more late payments can trigger late fees and cause your interest rate to increase. But many people aren't aware that credit card companies can also raise your interest rate if you are late on a payment to another creditor or lender.

Under the Universal Default Clause, even if you pay your Visa bill on time, if you are late with your payment to another card, your interest rate can increase on both cards. Credit card companies not only check your credit report at the time they issue the card to you, but they also keep checking it regularly for as long as you have an account with them. If they see late payments to other lenders, they can legally increase your interest rate.

2. If you are paying high interest rates, you may be able to have these rates lowered with a simple phone call. Call your credit card issuer and ask for a better rate. The credit card industry is so competitive that often companies will honor your request for a lower rate if you have a good credit history. They would rather lower your rate than lose your business to a competitor.

Repeat this process with every credit card you carry. If you routinely carry high balances on your cards, these phone calls can easily save you hundreds of dollars a year in finance charges.

3. A conveninant way to consolidate your debt is to transfer your high interest rate balances to a credit card offering a lower rate. Most consumers routinely receive offers for cards with special introductory rates of 0% for 6 months, or sometimes up to a year or more. As long as you pay off as much of your balance as possible before the introductory period ends, you will be able to significantly lower the amount you are paying in finance charges.

4. If your debt situation is really serious, you may consider taking out a home equity loan to pay off your credit card debts. This is not the ideal solution, since you are basically trading one form of debt for another. However, home equity loans typically have lower interest rates than those of most credit cards. Additionally, you can also benefit from this because interest on home equity loans is usually tax deductible. Be sure to itemize your deductions on your tax return and you can lower your tax bill at the end of the year, adding to your overall savings.
About the Author
Peter Kenny is a writer for Shop Smart Loans, please visit us at Debt Reduction and Unsecured Loans
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