Relief Debt Systems

According to an article in the Wall Street Journal, Moody’s Investor Service reports that U.S. credit card delinquency rates rose in October for the third consecutive month, while charge off rates declined to 10 percent compared to 10.7 percent in September and 11.5 percent in August. Part of the improvement for charge offs is attributed to administrative changes relative to consumer bankruptcy filings. Charge offs are considered uncollectable debt that is written off by creditors

The good news is that consumers, perhaps fueled by increasing credit card interest rates, are paying off a higher percentage of their credit card debt each month.  The debt repayment rate rose to 17.3 percent in October compared to 16.8 percent in September and 16.9 percent in August. What does this mean for consumers?

Rising credit card rates mean that less of your money is going toward reducing debt, and more is going toward interest, which represents income for the credit card companies. Paying down debt faster reduces interest charges, and can help you get out of debt for less money. Debt consolidation can help you pay off debts faster, and acts as a debt management tool by reducing several payments to one. Homeowners can qualify to take out a home equity loan or mortgage refinance to get cash for debt consolidation,  but tighter mortgage credit and falling home values can put this option out of reach. Unsecured debt consolidation loans can help you streamline debt payments and may offer lower interest rates than typical credit card rates. “Unsecured” means that your debt consolidation loan doesn’t require collateral. If you have good credit, you may qualify for an unsecured debt consolidation loan. It’s worthwhile to get several debt consolidation loan quotes, and compare the rates and loan terms carefully.

Debt Consolidation: First Step in Debt Management

Whether you achieve debt consolidation through a loan or non profit debt consolidation plan through credit counseling, debt consolidation simplifies repayment, may reduce interest rates and other charges, and helps avoid additional charges resulting from late payments or inadvertent over limit fees caused by the addition of finance charges to your account balance. Once you’re on track with a debt consolidation loan or plan, you can soon see your debt decreasing as you make monthly payments. Here are a few obstacles that you may encounter:

Temptation: You’ve consolidated all of your debts into one loan with one payment. Great! But you’re tempted to charge something on a credit card “just this once.” This is the quickest way to sabotage your debt consolidation plan. You can avoid temptation by not carrying credit cards with you; use a debit card instead. Emergency expenses: Saving for emergencies is an essential part of debt consolidation. If you don’t allow for savings, your debt consolidation plan could be challenged if you use a credit card for unexpected events. No household budget: Establishing a cash based budget that includes savings and your debt consolidation loan payments can help you stay on track.  Keep track of what you spend and where you spend; this is helpful for adjusting your budget or your spending as needed.

Debt consolidation can help you succeed in becoming debt free; with a little luck and lots of resolve, you can meet your goals.

Similar Posts:

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• Lawmaker introduces bill to reduce credit card interest rates
• Credit Card Debt Levels Fall in September; Fees and Rates Rising
• Debt management: Which debts to pay off first?
• Debt Management: Is Debt Consolidation Good?