Top 2 ways to get out of debt

[Feb 21, 2011.]

 

Since late 2008, American consumers have been steadily making a shift toward carrying less credit card debt. According to the most recent G.19 report released by the Federal Reserve, revolving credit declined at an annual rate of 2.75 percent in the four quarter.

At the same time, there has been in increase in installment debt. Installment debt allows you to pay your debt within a specified time frame, often for a fixed rate. Whereas revolving accounts are open, and the balances can be increased with new purchases, installment debt balances decrease with each monthly payment.

Following are two top ways you can convert revolving debt to installment debt and find debt relief.

Credit card debt consolidation loan

Credit card debt consolidation loans often prove an excellent way to organize credit card debt. These types of loans can convert revolving debt into installment debt, with a definite date to have the balance paid in full. Rather than make several monthly payments each month, you make one. Often, interest rates on a credit card debt consolidation loan are lower than on revolving credit card debt, which saves money on interest.

There's another benefit. With a credit card debt consolidation loan, you pay lenders the entire amount you owe, which is good for your credit rating.

Debt settlement program

If your financial circumstances have changed, maybe due to a job loss, and you are no longer able to meet your full obligation to your lenders, consider a debt settlement program. A debt settlement professional is experienced in negotiating a reduction in the balances you owe, and a reduction in the interest rate. Reducing the balances and interest rates can get the monthly payments back into an affordable range.

A realistic budget is very important. When you make a debt settlement agreement, make sure you can meet the new obligation. You would not want to fail at your debt agreement a second time. The debt settlement program may injure your credit rating at first, but if you make your new payments as agreed, eventually you should see your credit score start to improve.

 

About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.