A Few Thoughts on the Drawbacks of Debt Consolidation

There is a disadvantage when you consolidate credit card debt.

Debt consolidation schemes sometimes have the drawback that that not all your loans may be included when you consolidate credit card debt. Banks and lenders are not legally obligated to work with consolidators and some choose not to. This simply means that even when you consolidate credit card debt, you will probably still be left with some other cards and bills to pay. You need to keep an eye on these payments to make sure you don't get penalties for falling into arrears again.

Also a consolidation loan that appears on your credit report as a charge-off can negatively affect your credit rating. But some people couldn’t care less about credit ratings. What they want is to actually pay off their debts. So this is an individual decision based on each person’s feelings and preference.

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Some Quick Tips for Reducing Credit Card Debt

Reducing credit card debt is a hot topic these days, especially since credit card debt has contributed to the recent downfall of the US economy. Statistics show that the average credit card debt of an American household amounts to $9,000 and the overall American debt runs into billions of dollars. These figures do not even include other debts like house and car payments and student loans. Hence, reducing credit card debt is a goal most people want to attain so they can have enough money left to meet other obligations.

What are the ways of reducing credit card debt? One is negotiating for a reconstruction of your debt with the credit company or bank. This will enable you to get a lower rate for your payments. If you have been a credit card holder of good standing by paying on time or you are a customer of that bank, remind them of that and ask for a better interest rate. If you plan on reducing credit card debt, it is important for you to know that you must take the first step. No bank is going to take the initiative of calling you and offering a better rate.

Consolidation loans help too in reducing credit card debt. A consolidator makes money by paying the total amount of your debt to the creditor bank after negotiating with them. They then charge you a small fee for it. But the monthly payments you remit to the consolidator is still way below your monthly dues to the credit card agency, so you are reducing credit card debt this way. However, not all lenders allow this business nor are they obligated to. When going for a consolidation loan, check all the credit cards and debts you have and see if they can be accommodated in the loan. If not, be prepared to pay these loans the regular way and on top of the consolidation loan.

An obvious way of reducing credit card debt is to pay more than what the credit card agency requires each month. Paying an extra twenty or fifty dollars on top of the minimum dues will ease your credit card debt faster. But this method is not practiced by most since they want to use the extra money for other things instead of reducing credit card debt. Why pay more when the credit company will allow you to pay less? Well, if you don’t know yet, this is their way of making more money. By letting you pay the minimum amount, they can keep on charging you the interest rate for the outstanding balance on your loan while making slow progress on the payment of the principal. So instead of buying that new dress you’ve been eyeing but don’t really need, why not put the money towards reducing credit card debt?

There are ways of reducing credit card debt if you are really determined to do it. They might mean a temporary deprivation of treats but the peace of mind you get is incomparable.

Debt Grants Save Time and Money

If you have fallen upon hard times, applying for free debt grants may be time better spent rather than writing hardship letters to beg your creditors to defer your monthly payments. Repaying your bills using government money is a better solution to your problems.

If you are preprared to devote time and effort in writing hardship letters, why not spend that time filling out government grant applications instead, after all, there is very little difference between that and grant proposal. If you're an American citizen and over the age of 18, then you are eligible to qualify for government grants - all you need to do is apply.

The generous free cash awards can be put towards paying your debts, or the interest on those debts. freeing you from late fees, harrassment from debt collectors, no swapping bills between different credit cards, no "over your limit" charges, as well as improving a poor credit score. By paying off your debts, or at least getting up to date on them, you can dramatically increase your credit rating.

If you stop to think about it, you get free government money in return for a small amount of time spend writing your hardship letters, rather than just a respite from the assault from your creditors. You are taking steps towards a long term solution to your problems. By spending a little bit of time now writing to the goverment agency you are heading towards saving yourself thousands of dollars in interest payments alone.

I found a great website that has some free resources available, which you can check out here.

American Bankers Association Members Go Back to School

April is Financial Literacy Month and the American Bankers Association is attempting to reach out to 1 million students to help educate them about managing their finances.

Principles are keen to give their students essential life-skills in these times of struggling economies. This past year, the worries and stress from the economic downturn has flooded into jobs, homes and incomes in many families .

It is important that young people realise they desperately need financial education if they are going to avoid heartache further down the road.

The economic slowdown is affecting teens in several ways. According to a recent survey of US students aged between 12-17 conducted in February,

• 12% had been asked to help with the family budget
• 15% had curtailed extracurricular activities
• 49% said their parents had discussed family finances.

Read more information on http://www.guardian.co.uk/business/2009/apr/27/us-economy-students-financial-literacy

US Credit Card Companies Practices Pursued By New Policies in the Making

Controversial, unpopular credit-card practices, from higher interest rates on past balances to fees for paying by phone or online are being scrutinised by Congress and the White House.

Because of the depth of the current economic slowdown, lawmakers are pushing legislation this week that would help consumers by stopping a wide array of credit-card practices that essentially amount to higher costs for customers.

On Thursday, there is a scheduled meeting where credit-card executives are to meet the Obama administration at the White House on Thursday. This move has been taken to put further pressure on the finance industry, especially as Barack Obama, US President, is expected to attend.

For more information visit the article on the Wall Street Journal

There is a Way Out of Credit Card Debt Misery

With the average American household chiming in at some $9,000 in credit card debt, it's no wonder that many today feel somewhat overwhelmed by their financial obligations. There are however some ways you can reduce credit card debt if you follow a few simple tips and tricks.

Reduction in Credit Card Debt means Financially Free Family

You might not look forward to actually implementing any of these suggestions and of course they'll require some work and effort on your part, but if it means being able to reduce credit card debt then of course it will be worth it so that you and your family are financially free.

Trying Cheaper Brands Saves a Lot

There's nothing to say that you can't dine out or buy new clothes when you're trying to reduce credit card debt but think of how you can just cut back on these expenses. What about trying cheaper restaurants or going without the expensive things on the menu like drinks and desserts? You can also try shopping at outlet stores or even on eBay when you need new clothes to save you some money. By doing these things you're not denying yourself completely but are saving money which you can in turn use to help reduce credit card debt.

How to Track and Reduce Credit Card Debt?

For one thing, a good way to reduce credit card debt is to pay as much toward that debt as you possibly can, as opposed to paying the absolute minimum payment due. You might be as stretched as you possibly can be when it comes to your budget, but there are usually some other areas where you can cut back.

Advantages of Tracking Your Expenses

For instance, if you started keeping track of how much money you spend at drive-through restaurants, you might be shocked. Why not try packing your lunch for work everyday and foregoing that gourmet coffee? You can use that money to reduce credit card debt by paying the extra fifty dollars or so that you'll save by doing these things.

An Alternate Job to Reduce Credit Card Debt

You may also want to think about a second job, at least temporarily, to help you reduce credit card debt. If you work full-time already then this might seem like an impossibility but what about working Saturday afternoons at the mall? A few hours working at a retail store can really help tremendously and will probably still give you enough time for your other responsibilities.

Reducing Debts is a Temporary Solution

Remember, this might be just temporarily for a few months or so while you try to reduce credit card debt; this doesn't mean you'll be doing this for years to come. If you're married and one spouse doesn't work, it might be time to think about a part-time job for this person as well.

Try to Sell From Your Home

If there are young children in the home, consider what you can do to work from the home such as babysitting, selling things online, or being a virtual assistant. There are many websites that explain work at home opportunities that don't require a lot of time or commitment but that can still offer enough money to help reduce credit card debt.