Millions of people have a lot of debt and have a hard time meeting their monthly financial obligations. Well, I can tell you for sure that credit card companies don't have the money problems that many Americans do. In fact, here are some of the ways that credit card companies make money:
- In 2006, credit card companies made a total of $90.1 billion in profits from the interest they charged their customers.
In 2006, credit card companies made a total of $55.2 billion in profits from the fees they charged their customers.
It's easy to see why credit card companies made so much money: if a debtor (consumer) is late with a payment, even if it's just by one day, they get hit with skyrocketing interest rates and unfair late fees. This practise, which many people think is the same as legal loan sharking, is hurting the finances of many households that are already struggling.
If you're mad that you're being charged these crazy fees, it's time to take a long, hard look at your finances and figure out which options will help you get out of debt the best.
- Debt Consolidation - Debt consolidation is used by people who want to do the right thing by paying off their credit card debt and getting a loan for the full amount they owe to their credit card companies. You might be able to get a home equity loan or line of credit if you have good credit and enough equity in your home. This will lower the amount of interest you have to pay, and you'll only have to make one payment each month instead of many payments to your different creditors. Most financial experts don't like debt consolidation loans because they put your home equity at risk. Also, many people who consolidate their debt end up charging up their credit cards again, which means they owe all of their credit card companies and the bank that gave them the money for their home equity loan.
Consumer Credit Counseling: This could be the best option for you if you have a stable job and can make a long-term payment plan. Consumer credit counselling services will talk to your creditors about lowering your credit card interest rates. Then, you'll send one monthly payment to the consumer credit counselling company. The company will then send the agreed-upon monthly payments to your different creditors. Unlike bankruptcy or debt settlement, you'll still be responsible for paying the full amount you owe over a number of years. However, as stated, consumer credit counselling may be the best option for you if you can realistically commit to a long-term payment plan.
- Debt Settlement: Debt settlement is when a person (or a company hired to represent them) negotiates with their creditors to get them to accept less than the full amount owed as full payment. Most of the time, your creditors will agree to settle your debt for 50 percent or less, either all at once or over 4-6 payments. Debt settlement is best for people who can't pay their monthly bills or who don't want to commit to a long-term payment plan because of an unexpected event. Debt settlement has helped a lot of people and businesses who would have had to go bankrupt otherwise.
- Bankruptcy: Most people only file for bankruptcy when they have no other choice. Most people don't want to file for bankruptcy because of the long-term effects and the fact that bankruptcy is public information. If you're thinking about filing for bankruptcy, it's best to think about all of your other options first. If you can't get enough money for debt consolidation or debt settlement and you can't afford a payment plan, hire a bankruptcy lawyer with whom you feel comfortable.
Before making a final decision about your path to financial freedom, you should learn as much as you can about all of your options. This will help you feel confident that your choice is the right one for you. Click here to find out more about debt settlement.
