Some more Credit Card debts tips

Break the Savings

Though it may seem an unattractive option, spending one’s savings or investments on repaying high interest rate credit card loan can actually be a way to get rid of high cost debt also saving quite a considerable amount in the process.

The dollars earned as interest from savings account or other investments can hardly match the high cost of servicing a credit card debt. Thus paying off such debts from savings in effect means earning many more dollars. There cannot be an investment with higher returns.

Borrowing from Life Policy

Borrowing against life insurance policy is another option to repay high interest rate loans. Rate of interest on such loans are typically low and repayment terms easier. It is like accessing one’s own money to pay off a debt. In case of death of the policy holder before the loan is repaid, the beneficiary gets what is available after repaying the outstanding loan with interest. This is a way out of bad debts through a low interest debt.

Friends in Need

Sometimes friends or relatives may help out by lending for getting a person out of bad debt. It is one of the best options if the opportunity is there as it would normally be a very low interest loan with flexible repayment. However for the sake of avoiding future misunderstanding that might jeopardize the relationship, it is advisable to put the conditions of such loans in black and white clearly spelling out the repayment terms and interest rate.

Home Equity Loan

The accumulated equity from repayment of home mortgage can be a good source of repaying high interest bad debts. The interest on home equity loan is quite low compared to a credit card loan and above that the interest paid for home equity loan in most cases is deductible from income tax. That makes the effective rate of interest still lower and home equity loan one of the cheapest options to pay off bad credits. However one must avoid new credit card loan after repaying the old one.