Together with home and car loans a typical American household has approximately $10,000 in credit card debt. In other words, American society is clearly overburdened. Quite recently credit card minimum payments have doubled and interest rates have increased making it unwise to keep a big amount of credit card debt. Let me share with you a few tips of how you can sort out your finances. May be you will not be able to clear your total credit, but you may consolidate your debt to a good level.



Shift your cash to other credit cards. This will not be possible if you have maxed out on all your credit cards, but if you have any space somewhere else, then you can shift some of your debt to a card with a lower rate of interest. Another option if feasible would be to grab some low interest "teaser" rates provided by credit card institutions for transfer of balance to fresh accounts. But be cautious. These rates are not long lasting and the generally the instruction goes that that the rates can rise reasonably higher if you cannot make the payments on time. Moreover, new charges on the account may have higher applicable rates.

Get a home equity loan. Interest rates are on the rise on all kinds of mortgages but home equity loans will still come cheaper than credit card loans. Additionally, at least for now the interest is tax deductible. Be careful that if you do this you are giving your house as collateral, and if you cannot make timely payment you will have no house of your own! Only opt out for this method if you are confident that you can regularly pay.

Loans from 401(k) plans. Quite a few employers give their employees permission to take loan against their own 401(K) plans. This translates as borrowing from yourself at a reasonable rate of interest. However this is not a perfect solution. While you borrow at a high rate, the cash you have taken on loan is staying same. You can clear the payment on time, but you will never recoup the rise in your retirement savings that you skipped when you were in debt. Thus, this alternative is not a good idea.

Have a talk with your lender. Lenders usually do not want to renegotiate with clients who are paying their dues timely, but if you are in arrears, you may be able to better the terms of your loan to a certain extent. Rather getting nothing at all, lenders would accept less than full payment. Nevertheless, be cautious that if they decrease the money you owe, the amount waived may be understood by the Internal Revenue Service as taxable income.