Getting out of debt is just a matter of decision and self-discipline. However, decision and self-discipline is just half the battle. There are various tools available which you can use to help you get out of the suffocating debt. These tools can give you a hand to ease your way out the hole.
Balance transfer is most viable tool you can use to help you get out of debt. As the name implies, balance transfer is simply an act of transferring your balance (aka debt) to other company that offers lower annual percentage rate (APR). As sort of promotion, many credit card companies allow you to transfer your balance from one credit card to a new credit card at 0% APR. For example, if have $10,000 balance from one credit card company at 15% APR to another credit card company at 0% APR for a year, you can save about $1,500 in interest.
Balance transfer is a good tool but it is not a cure-all. There also some downsides in using balance transfer. You need to have good credit score to get approved for new credit card. Then, there is a fee to transfer a balance which might not be good to your savings. Try to us use a help debt calculator to find out if you have gain if you transfer your account.
Debt consolidation loans
If balance transfer will not work for you, you may try the debt consolidation loan. This can be done by consolidating all your credit card loans, and take one personal loan to pay them all. The debt consolidation loan is some kind of refinancing that will help you focus on a single debt. Although, you still need a good credit score to get a personal loan. The best thing about the debt consolidation loan is that you have a fixed term and you will be obliged to make the minimum payment every month. And most of the debt consolidation loan companies offer lower interest rate to those who have excellent credit score.
Debt Management Plan (DMP)
Another way to reduce debt is through debt management or credit counselling. Debt management plan is an agreement between you and your creditor. It is usually done by employing a third party called credit counsellor. DMP can help in reducing the outstanding and unsecured debts, and to help you recover control of your finances.
But you have to be careful in choosing a debt management company because there are companies that scam their clients. Instead of helping you get out of your debts, they will make it worse. Do your research first before signing any contract with any debt management company.
I hope this can help in getting out of debt, soon. Good luck in your fight against debts.
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