Debt relief can be the best way to consolidate debt for many families because it’s the only way to both reduce debt by a substantial amount and get much lower monthly payments.
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New York, NY (PRWEB) August 24, 2012
The average credit card debt among American borrowers has increased by 6 per cent over the past year, according to the latest report from credit information company TransUnion Corp. Data from the report shows that the average debt incurred by U.S. card holders rose from $4,699 in the second quarter of 2011 to $4,971 in Q2 2012. In addition to the growing debt among the country’s borrowers, the number of new credit cards in Q2 2012 has also seen a surge, increasing by 4 per cent compared with new cards issued within the same period last year. Of these new credit cards, more than one-fourth (26.1%) have been handed out to nonprime borrowers, or people whose credit scores are equal to 700 or lower. Although TransUnion reports that delinquency rates remain at an all-time low, representatives from National Debt Relief believe that the growing debts among Americans and the increasing use of credit among nonprime card holders necessitates further education on handling debt.
There are various ways to address debt, according to the company’s representatives. One strategy is by paying off debts with the highest interest first, and then paying other credit card debts with lower interest rates afterwards. Another popular method to deal with debt is by zero balance credit transfers, a method where borrowers transfer all credit card debt to a new card that has a zero interest rate. This method can help debtors save around $900 on $5,000 of debt.
However, company experts warn against zero balance credit transfers, since interest rates on such cards could skyrocket to as high as 20 per cent once the promo period ends, increasing the chances for racking up more debt.
Other credit card debt relief options include secured and unsecured debt consolidation loans, which permit card holders to get loans to pay off debts. Unsecured loans come with a higher interest rate as opposed to secured loans because of the increased risk. According to representatives from National Debt Relief, debt consolidation loans may be helpful for people who can only afford to make small monthly payments:
“One advantage of a debt consolidation loan is that you can stretch out your payments to five, seven or even 10 years. When you stretch out a loan for that many years, you should end up with a much lower monthly payment,” explain company speakers.
The company suggests that of all the available methods for debt management, debt relief or debt settlement may actually be the most effective way. This method, wherein families work with a debt settlement company to negotiate on their behalf, is the only method that helps reduce debt:
“Debt relief can be the best way to consolidate debt for many families because it’s the only way to both reduce debt by a substantial amount and get much lower monthly payments. A skilled debt relief company can usually settle credit card debts to a fraction of what you owe,” state representatives from the company.
With the growing debt that U.S. borrowers are now incurring, National Debt Relief asserts that education on debt relief options should be considered a top priority among debtors. Advice, such as those offered by the company, can help reduce panic and stress over debt.