If you are paying off debt, you might think you are on the right track. However, there are some foolish ways to pay off debt that end up causing havoc in your financial and family life. With debt counseling you learn about the right way to handle overwhelming credit card debt. By consolidating debt through a reputable Christian credit counseling organization, you can avoid bankruptcy, debt settlement scams and several other risky methods. According to an article by mainst.com, there are several “wrong” ways consumers pay off their credit card debt. With the Federal Reserve promising to increase interest rates in the near future, it is prudent to engage in debt counseling.
Avoid balance transfer options
Experts say it’s easy to get tricked into balance transfer offers that lure you with a teaser rate. If you don’t pay your balance off in time, you could be subject to a higher rate. Instead of transferring your balance from one credit card to the next, consider a debt management plan that gives you a target date for pay off and a lower interest rate across the board.
Skip title car loans
Another risky option is a car title loan. In some states, it’s even illegal to offer consumers a loan using a car as collateral to pay off a debt. Before you lose your car with a scam, talk to a trained credit counselor who won’t judge but will offer proven solutions.
Don’t use your home as collateral
If you are a homeowner, you have likely heard of home equity lines of credit. With more people having equity in their homes as home prices across the country rise, it’s tempting to use your home like a piggy bank. However, you could end up having a home with negative equity. Refinancing your mortgage is only a good idea if you can get a lower interest rate because lengthening the loan gets you in more debt instead of less debt.
Other bad ideas include using payday lenders to come up with fast cash to make a credit card payment. By receiving debt counseling you learn the difference between debt consolidation and debt settlement. With debt consolidation, you actually pay back what you owe your creditors so your credit score eventually goes up. With debt settlement and bankruptcy, your credit score often plummets. It’s good to feel motivated to pay off debt, but do it the right way.
At Christian Credit Counselors, our goal is to help our clients get out of debt 80 percent faster. We show you the benefits of debt consolidation and negotiate with your creditors to get you a lower interest rate.
Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.