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How Transfering or Consolidating Debt Can Save You Money Over Time

Debt has a way of creeping up on you. One minute you’ve got things under control and the next your head is spinning, trying to decide which bill is more important than another. Before you reach this point, it’s important to reduce your debt sooner rather than later. Thankfully, there are ways to get your debt down or paid off faster than you might imagine.

Credit Card Transfers

If you’re like many people, you probably have in your possession anywhere from 3 to 6 credit cards. If you pay them off each month, there are no additional fees and you make out fine. However, most people charge things and then pay them off over time. The problem is that even though you have the credit to do this, you’re putting yourself at risk for throwing your hard-earned money straight out the door. The interest that accumulates many times on a purchase paid over time ends up costing you more than the actual item you purchased. The good news is that there are companies such as CreditSoup.com that find credit card companies who have benefits beyond the credit privilege. For instance, they provide you with a list of different credit card companies and their specialty. Some of them include credit card balance transfers which you can use to take your existing balances and transfer them on a new card interest-free for a period of up to 12 months.

Refinancing your mortgage

If you have equity in your home, you could opt to refinance it and use the monies to pay off your other debt like credit cards, medical bills, student loans and personal loans. This way they are paid and you can reduce your monthly budget by the hundreds, maybe even a thousand, depending on the number of cards and personal loans you currently have.

Borrowing from your 401K

Many people have money at their disposal and don’t even know it. If you are currently paying into a 401K and have done so for many years, you have cash you can use to pay off your debt problem. Find out what bank handles your 401K and then contact them to see if you can take out a loan. With a 401K you can borrow up to 50% of your accrued balance. As an added bonus, when you repay the loan with low-interest you’re paying yourself back.

Debt consolidation loans

If you have more debt than simply credit cards and your credit is good, you may want to consider a debt consolidation loan. Most banks that offer it will require that you have sufficient collateral such as a home, but in the end, this is a fast way to take most, if not all of your outstanding debt and lump it into one affordable monthly payment.

Debt Management Program

If your credit score is less than good, acquiring a loan from a bank is probably not going to happen. Entering into the debt management program gives you access to another way to keep up your debt with the help of a debt counselor. They work similar to a loan acquired from a bank, except that you will use your money to reduce the debt. The advantage to this versus trying to go it alone is that these agencies have regular dealings with the credit card and loan companies, and because of this many times they can get your current interest rate and the minimum monthly payment reduced. However, if you miss a payment, the agreement is null and void.

If you are starting to feel a little overwhelmed with the amount of debt you owe, it’s wise to do something before you miss a payment and your credit score turns from good to bad. There are many ways to achieve this, and once you eliminate your debt it’s good to remain in control of your finances to avoid it happening again in the future.

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