Sunday, March 25, 2007

How Much to Pay to Reduce Credit Debt

When you are in debt, the last thing you need is extra fees on top of what you already owe. You should not have to pay anything to reduce credit card debt. Anyone can negotiate with a credit card company, without having to pay an agency to act as a middle-man.

Features

    Credit card debt is made up of the amount that you have borrowed plus interest and any late payment penalties. It's difficult to reduce the first part, but you can negotiate with the credit card company to lower the interest rate and erase penalty fees.

Prevention/Solution

    Late payment penalties are punitive. They are designed to strongly encourage you to make payments by the deadline. Avoid paying unnecessary fees by setting up an automatic monthly bank transfer to pay the minimum monthly amount.

Benefits

    You can save a fortune in interest fees by transferring the balance from a high-interest credit card to a low-interest one. Once you've done that, do not close the old card account. Simply put it away somewhere where you won't be tempted to use it.

Potential

    If you're struggling to make minimum monthly payments, it may be time to talk to the card company. It's in their interest, as well as yours, that you do not default on your debt. Credit card companies can be surprising willing to reduce your debt by as much as 50 percent, depending on your financial situation.

Warning

    You don't have to hire a company to reduce your credit debt. You can negotiate directly with credit card companies and debt collection agencies and apply for a debt consolidation loan without a broker.

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