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March 16, 2007
A Way Out of Costly Credit Card Debt
Credit card debt can definitely cause a feeling of hopelessness. The seemingly insurmountable pile of credit card bills can really start adding up and it sometimes seems that even if you have stopped using your credit card that the debt owing just keeps growing due to the incredibly high cost of card interest rates.
It's time to reconsider how to pay down your card debt. Paying down your high interest rate credit card should take priority as your cards are likely your highest rate loans. So get them paid first.
Most people are advised to simply keep paying down your credit card but I just came up with an alternate solution that will help get you out of debt faster. Rather than simply paying more and more on your credit card balance you should consider taking out a secured loan at a MUCH lower interest rate to pay off your credit cards and then proceed to pay off your secured loan.
The average interest rate on credit card balances is roughly 18% and a secured loan can be acquired at about 9% - That's an amazing 50% savings in interest charges.
Apply your interest savings from your secured loan directly to the balance of the loan and you WILL save even more money in interest charges.
If you do this you will pay off your debt very quickly, faster than you ever imagined. There's hope in solving your debt problems.
Another strategy you can try is to consider credit card applications that offer a 0% introductory period for anywhere between 6 to 18 months. Then after the introductory period expires, go apply for a secured loan to drive your interest costs down even further.
I must caution you though, to carefully select the credit card you are applying for and apply only once for the card that will best fit your needs and think honestly about the offer that you are most likely to qualify for because if you "over apply" for credit it will impact your FICO score.
When the introductory rate expires on the 0% intro rate offer and you are ready to apply for a lower rate secured loan be sure to mention your strategy to the banker so they are aware of what you are doing. If you don't let them know what you are up to they might perceive you as a "credit junkie".
Make sure you come back to visit Crediteria.com for more great advice. More money saving tips coming soon!
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