So you have debts.
It sucks, but you are not alone – around 80% of Americans are in debt, too. Part of that is good debt, like mortgages and student loans; Some of these aren’t as great as overwhelming credit card balances.
If you do decide to take on this credit card debt, you have several options, with debt management and debt consolidation being the most common and affordable. Debt settlement companies are a third option, but they can be expensive, have a bad credit rating, and won’t stop creditors from calling you.
So, consider whether debt management or debt consolidation is right for your situation instead of using one of those debt relief programs you heard about on the radio.
When you have credit card balances beyond your repayment options, creditors may be open to negotiation. This can be most helpful when you’re working with a nonprofit or credit union to create a debt management plan.
Certified advisors will help you set up a voluntary agreement between you and your creditors and set up a one-time payment for you. You pay directly to the nonprofit that handles each of your debt payments on your behalf. There are no fees and you will likely receive reduced or waived fees and charges from your creditors.
Keep the following in mind: Your debt management plan can take three to five years to pay off. This means that you will not be able to open a line of credit until your debts have been paid in full. That means no new credit cards, no mortgages, and no car rentals.
That being said, during this time your credit could improve (no tough inquiries!) And you can potentially build up your savings to meet your financial goals.
If you have a number of credit cards with balances escalating and interest heaps making it worse, a debt consolidation loan might be the right choice for your situation. It is a personal loan that allows you to combine multiple high-yield debts into a single, lower-interest loan.
Think of it this way: Credit card interest can be 20% or more of your balance every month. These interest payments could keep you in debt to your credit card company. A debt consolidation loan will pay off these balances for you so you can focus on one lower interest payment each month.
You can still open new lines of credit (the loan itself) is eventually a new line of credit). This won’t put as much of a strain on your financial life as a debt management plan. But it could knock your credit score down with a tough query, so getting a good score will primarily help secure a worthwhile loan.
You can start consolidating your debt and lowering your interest payments right away. A website called AmOne want to help.
If you owe your credit card company $ 50,000 or less, AmOne compares you to a low-interest loan that can be used to pay back every single one of your balances.
The advantage? You have to pay an invoice every month. And because personal loans have lower interest rates (AmOne rates start at 3.99% APR), you will be out of debt The much faster. Plus: No credit card payments this month.
AmOne keeps your information confidential and secure, which is why after 20 years in business it probably still has an A + rating from the Better Business Bureau.
It takes two minutes to See if you qualify online for up to $ 50,000. You need to give AmOne a real phone number to qualify, but don’t worry – they won’t spam you with phone calls.
This article originally appeared on www.thepennyhoarder.com