It has been seen recently that Americans are saving less than they have been ever before.  It has also been seen that they have larger debts than before. It is possible for one home loan, car loan and few credit card bills to spiral out of hand. There are many people who are struggling under debt and have made for themselves more debt than they can bear. To worsen things further, new bankruptcy laws are making it harder for persons who are unable to pay their bills to even file for bankruptcy.

There are many remedies available that let people reduce the rate of interest on their debt, their monthly payment or both:

(1) If you have the history of making timely payments and have no history of making fewer payments, then you can negotiate with your credit card company to lower the interest rates. You can call up your credit card company. It is not a foolproof plan and sometimes may not work.  However, nowadays the market for credit cards is very competitive.  Therefore the lender may lower the interest rate than loose a valuable client.

(2) If the credit card company is unwilling to lower the interest rate, then you get a new credit card that offers you a better interest rate. You don’t have to pay 20% extra. Interest on credit cards is not tax deductible. Therefore, if you get a credit card with lower interest rate and you move your balance to the newly purchased credit card, it can help you to save something.

(3) You can take for yourself a traditional bank loan that has collateral. You can put cash or investments as collateral against such bank loan. Unlike credit cards, interest is not subject to tax but the rate of interest may be better than the interest offered by credit cards. Also, if you consolidate together many payments as one with a bank loan, your monthly payment will be lowered.

(4) You can take also take a home equity loan or home equity line of credit. If you have equity at home, you can borrow 80% of your equity in a lump sum of credit or a revolving line of credit. As interest rates are low on home loans you can consolidate your debt this way easily. Further, the interest is not tax deductible. One negative point here is that there is a fee and/or closing costs to the application.

You can use one of the ideas mentioned above to reduce your debt. If none of the options above is applicable to you, you need to speak to a credit counselor. The credit counselor may give other options that work for you. The credit-counseling agencies mostly do not work for profit; therefore, it is easier to take their help.

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