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How To Manage Credit Card Debt

How To Consolidate Your Credit Card Debt To Lower Your Interest Rate

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If you have equity in your home

Consider using a home equity debt-consolidation loan to pay down your debt.  Your interest rate on the home equity loan will almost always be better than that on credit cards, plus it'll be tax-deductible while the interest on your credit card debt isn't.

Just make sure you'll be able to make the payments on the home equity loan to avoid losing your house.

Unsecured Loans

You might also be able to consolidate your credit card debt with an unsecured loan -- a loan which is not secured by real property or other specific asset. Be careful. This only works if the new loan has a lower rate of interest than your credit cards. Most loans of this type charge an interest rate higher that that on your cards, but you may be able to find one that's lower.

Don't be lured by offers to consolidate your loans. You'll be better off working with a consumer counseling agency or working out your own repayment plans with the credit card companies.

NOTE: When moving a balance from a credit card, it is advisable not to close the account. In fact, it is advisable to at least use a credit card every six months, or even better, every three months. Credit card companies have been known to close accounts because of inactivity. An account closure for whatever reason can hurt your credit score which can impact your ability to get more credit when you need it, and other unexpected areas such as automobile insurance premiums. (The result of a closure is that you automatically increase the percentage of total available credit you are using. This decreases your credit score.)

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