Strategies for paying off costly credit card debt

On Behalf of | Sep 16, 2016 | Debt Relief |

Many reasons could cause Texas residents to rack up high credit card bills. A job loss or medical crisis could put someone who normally keeps up with the bills into debt. To tackle it, a person could consider transferring a balance to a new credit card or getting a loan from a 401(k) retirement account.

Numerous credit card companies offer zero percent interest on balance transfers to entice people to sign up. This interest-free period could last several months or even over a year. Although a balance transfer fee will likely be imposed, the cost will be lower than paying high interest rates. While the balance is not accruing interest charges on the new credit card, the person could focus on paying down the debt.

Another common tactic for debt management involves retirement savings. Many 401(k) plans allow participants to take loans from their accounts. The interest rate is typically very low and up to five years could be available for paying back the loan. The loan could be used to eliminate credit card bills. while banks and credit unions offer loans, the borrower usually has to have excellent credit, and high credit card balances may not work in a potential borrower’s favor.

In some situations, however, debts might overwhelm a person to the point that bankruptcy could make sense. A person could talk to an attorney about the possible benefits of bankruptcy. The two principal forms of consumer bankruptcy are Chapter 7 and Chapter 13, and an attorney can outline the eligibility requirements of each.