Americans owe approximately 890 billion in credit card debt, which continues to grow.
Americans are using consumer debt, primarily credit cards, to help offset the higher costs of goods and services caused by inflation. Rising interest rates are also increasing the costs to purchase or refinance a house while making home equity loans less viable to pay off credit card debt. Rising interest rates could create additional financial pain if you have difficulty paying down your credit card debt. Your monthly payments will likely increase because most credit cards are attached to variable interest rates.
There are several options to consider when dealing with overwhelming debt. If you have excellent credit, one way to fight high interest is to balance transfer to a zero or low-interest promotional rate and try to pay the balance before the promotional rate ends. You can also consider using a low-interest personal loan to pay off the high-interest credit card debt. Home equity loans are one way to accomplish this, but some Texas markets are seeing home prices decline. Texas also limits the amount you can borrow in a home equity loan or cash-out refinance to 80% of the value of your home.
If a new low-interest loan to pay off high-interest credit card debt is unavailable to you, a credit counseling debt management program could lower your existing credit card debt rates. However, this is a hardship program, and your credit cards will not be able to accept any further charges. Depending on where you are now, this type of program could negatively impact your credit score, but if you cannot qualify for a debt consolidation loan and your focus is on getting out of debt and rebuilding your credit, this could be a good option. You will enjoy one monthly payment, which could be lower than the combined minimum payments on your credit cards.
A debt settlement or debt negotiation program is another option to deal with unsecured debts. You may be able to include credit card debt, personal loans, and often predatory loans, which sometimes have interest rates over 500%. Although predatory loans are illegal in some states, Texas permits lenders to offer them. When using debt negotiation, your creditors are not paid on a monthly basis. Instead, you will put money into a special purpose account while your
creditors go unpaid until enough money is available to offer a creditor a settlement for less than the balance. Unless you are already delinquent at enrollment, your credit score will likely decrease since your creditors are not being paid as agreed initially. However, you may be able to have a program payment of less than half compared to minimum payments and resolve your debt in as little as 24 to 48 months, depending on what you can afford monthly. This means you can start rebuilding your credit quickly after you graduate. Keep in mind that eliminating debt, whichever method you choose, will improve your debt-to-income ratio, which is often a more critical factor in your financial profile than your credit score. It is important to keep in mind that the quality of service you receive can vary widely between companies offering this debt settlement which is essential to your success. Research any company with the Better Business Bureau, make sure they are licensed in Texas and pay close attention to the fees charged.
Debt Redemption Texas Debt Relief has been helping Texans to resolve credit card and personal loan debt for twenty years. As a 100% veteran-owned, state-licensed, and BBB Accredited company, their Texas Debt Specialists exclusively help Texans with a variety of solutions. These include shopping for the best debt consolidation loan, a credit counseling program, or their debt negotiation program, which is provided to Texans with 40% lower settlement fees than most out-of-state competitors. Debt Redemption also works with a Texas bankruptcy law firm if you would like to compare bankruptcy to non-bankruptcy solutions. Speak to a Texas Debt Specialist for a free and no-obligation phone or office consultation by calling 800-971-4060 or visiting debtredemption.com
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