Credit Card Debt Elimination Options

Everyone knows that the solution of credit card debt elimination lies in paying off the debts on time and never allowing your credit card debts to accumulate in the first place.

However, if you are already trapped in a viciuous circle of increasing credit card debt, here are are some options for credit card debt elimination.

1. Balance Transfers

Balance transfers involve transferring your existing credit card balance from one credit card with high rate of interest to another credit card with significantly lower interest rate. This solution is quite popular with many people although you have to keep in mind certain things regarding this process. Some cards provide you with an APR i.e. annual percentage rate, which indicates that for the initial period the rate of interest will be low but will go up after that certain period. In the short term balance transfers would be a good idea but always look put for an increase in the APR; otherwise you will be paying a higher amount of interest again losing any savings you may have gained.

2. Credit Card Debt Consolidation Loans

A credit card consolidation loan pays off your present debts on credit cards carrying high interest rate by merging them into a single debt on a new loan with a much lower rate of interest.

Here's an example:

Suppose you have debts amounting to $10,000 on three credit cards and let's assume that average APR (the annual percentage rate) for your three credit cards is 20%. That means that for the outstanding balance of $10,000 you'll be paying $2000 in interest during the year. 

With a credit card debt consolidation loan, all your current debts on credit cards are put into a single loan with a lower rate of interest.

For example, let's assume that your present debt of $10,000 will be converted into a credit card consolidation loan with a 10% interest rate.That means that you'll be paying $1000 in interest charges, although there may be a small $100 fee to set up the loan in the first place.

That means that you would save $900 per year compared to what you would be paying on your credit cards.

Credit card debt is a serious issue and if your monthly balance continues to increase you should consider taking advice from professional financial advisors who will assist you with credit card debt elimination.