How Can I Clear or Reduce My Debts?

There are many ways to clear or reduce your debt load. By consolidating your debts and making more than your minimum payments, you can reduce debt faster than you ever thought possible. Consolidation may include negotiation to bring your overall debt down and this can be done on your own or with the help of a financial company.

Debt Consolidation

Consolidate your debt by taking out a bank loan to pay off your creditors. If you have high-interest debt, borrow at a lower rate. That will not only will eliminate your many current debts but also facilitate a single payment to one bank for your debt load.

Contact a debt-consolidation loan company if you do not feel you can do it on your own. Be aware of the fees they charge to help you with your consolidation. These companies often loan you the money and charge a specified interest rate on top of fees. Make sure you know how that interest rate compares with your present debt and be aware of the fees and how they relate to the company's service.

Debt Negotiation

Negotiate with your creditors and get them to lower the balances you owe on credit cards. Creditors may reduce principal in return for a lump-sum payment, though in many cases the accounts will have to be closed. If you have money or can borrow money at a lower interest rate to pay off or reduce debt, you may be able to get creditors to significantly lower what you owe them.

Payments

Making larger payments, if you can, will lower your debt more significantly than paying the minimum amounts due. That extra money every month can be applied to your principal and new payment amounts will continue to drop when they are calculated. If you continue to make more than the minimum payments, you can erase or reduce a substantial amount of debt in a short time.

Make more than one payment per month. This tactic will lower your principal amount. If you make one minimum payment when it is due, that will take care of your interest. Send in another payment and specify on the check itself that the total all be applied toward your principal. This will lower your principal much faster than the minimum payment that is used to pay interest accrued on your account.