Overcoming Your Credit Card Debt Part 3 last one so read it !!

This is not just for home owners so keep reading.

A home equity loan can often be a great idea for debt consolidation. Do you own a home? If so, do you have some equity built up? The equity in your home is what a buyer would pay for your home, less the outstanding debts, such as how much you owe on your mortgage. The reason this can be a good idea is that a home equity loan almost always offers a much lower interest rate than your credit card. Plus, because it involves mortgage interest, it is almost always tax deductible. Do not take out a home equity loan to pay off credit card debt then turn around and charge up your credit cards again while you are paying off the home equity loan. You will end up in a deeper pit of debt than you were to start with. Do not take out a home equity loan if you have any fears or doubts about being able to pay it back in full. If you default on this loan, you could end up on the street. For a free no obligation home equity quote, go to our home loan center.

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If you have a savings account, you might consider using the money in it to pay off your high-interest credit card debt. You are probably not earning anywhere near the interest in your savings that you are paying on your credit card debt. As soon as you get that high-interest debt paid off, you should begin building up your savings again.

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If you have a 401K retirement plan at work, it might be a good idea to borrow from it to pay off your debts. The drawback is that you will probably end up paying taxes on the loan and interest twice: once as you pay it back with your after-tax dollars and again when you start withdrawing that money to live on after retirement. Also, be careful about your employment status. If you think you could lose your job or quit before the loan is paid back, you will be required to pay back the loan in full within a very short period of time, usually 30 days. If you don't, you'll get stuck with taxes and a 10 percent IRS penalty for early withdrawal, unless you are over the age of 59 ½.

Another idea you might not have thought of is borrowing against a life insurance policy, if you have one and it has built up a cash value. Most insurance companies allow this, and the interest to pay this loan back will be less than your credit card interest. Just remember that if you die before paying back this loan in its entirety, you will leave your beneficiaries with less money than you intended, because the insurance company will keep what they are still owed.

If all other avenues have been exhausted, try renegotiating with your credit card issuers. If you can convince your credit card issuer that you are on the edge of filing bankruptcy and you cannot make your payments, they might be willing to change a few things in order to get some of the money they feel they deserve. They might lower your monthly payments, dissolve some of your debt, give you a lower interest rate or work out a different repayment schedule. It's worth a try.

Bankruptcy is something you must try to avoid as it can greatly harm your future credit rating and score. This black mark will stick to your credit report for ten long years. But as a last resort, it might be a way to escape serious, debilitating credit card debt.


The deeper you are in credit card debt, the harder it will be and the longer it will take to get out. But you can do it, if you commit yourself and hang in there. As you eliminate one debt after another, you will have more money to dedicate to the remaining debt. This is called the "snowball" effect. Results will be hard to see at first, but if you keep at it, you will eventually see your debt disappear.

Just imagine the day you send in the final check to eliminate the last of your credit card debt. When that day comes, you ought to celebrate. You surely will have earned it.