What Are My Options For Fixing Debt?

WHAT ARE MY OPTIONS FOR FIXING DEBT? THE FACTS $15,191 $854.2 BILLION AVERAGE HOUSEHOLD CREDIT CARD DEBT BILLION IN NATIONAL CREDIT CARD DEBT THE AVERAGE INDEBTED HOUSEHOLD'S DEBT IS GOING DOWN DEBT IN 2007: $16,675 DEBT IN 2013: $15,191 2007 2008 2009 2010 2011 2012 2013 YEAR And the Survey Says... Credit.com recently did a survey of 2,223 adults regarding their debt issues, and here are some crucial findings from the 55% of respondents who said they have at least some credit card debt. IMPORTANCE OF HAVING A LIKELIHOOD OF STARTING LIKELIHOOD OF PLAN IN PLACE DURING 2014 TO PAY DOWN THEIR DEBT ELIMINATING ALL CREDIT TO GET OUT OF DEBT IN 2014 CARD DEBT IN 2014 51% said it was "extremely 68% said it was "extremely likely" 40% said it was "extremely likely" important" 30% said it was "somewhat 17% said it was "somewhat likely" 27% said it was "somewhat or or moderately important" moderately likely" THE OPTIONS JUST CALL Explaining your circumstances to your credit card company and requesting a rate change is an easy first step. Sometimes they'll reduce your minimum payments or even interest rate just for asking! + Is very simple to do! Just pick up your phone. Larger banks may be inflexible about changing rates - Works best before you're behind on payments, and have a legitimate circumstance - Reduced minimum payments don't solve the problem, and can increase time to payoff and therefore total interest paid. + Can result in an immediate reduction in monthly interest or minimum payment EQUITY You can consolidate debt by getting a home equity loan or line of credit and using the proceeds to pay off your high interest credit cards, then paying off the loan through fixed payments. OR LINE OF + Typically lower interest rates and higher borrowing limits than a credit card because Requires existing home equity - You're risking home foreclosure if you fall behind on payments, which is much worse than defaulting. you're borrowing against home equity + Can be a lump sum loan or an open line of credit like a credit card DIY You can consolidate debt on your own through tactics like debt stacking and strict debt management. Is pretty much what a credit counselor will do for you, minus fees May not have enough self-discipline to handle it + Encourages discipline and financial understanding through experience and trial & error Sometimes financial situations are too dire to handle by yourself Careful! Some companies called debt settlement companies claim to be able to reduce your debt, but their process involves stopping all payments to creditors and reaching a settlement. They seldom work, and even if they do, they always leave your credit Score in shambles. ANSRE This involves taking advantage of a new credit card's introductory rate by transferring all high-interest debt to the new card. CARD CARD + If you can pay off your debt within the introductory term, you can save a lot of money - After the introductory term, rates can skyrocket even higher than previous cards + Can combine bills into one payment - It's still a credit card, and requires self-discipline and money management A debt consolidation loan is a loan that is for the sole purpose of paying off debt. It consolidates debt into one payment and is repaid in a fixed schedule. DEBT COA LOAN Can significantly reduce interest rates and put you on a payment schedule to have debt paid off quickly Better rates and higher borrowing amounts require good credit + Combines debts into one regular payment Fixed payments are higher than a minimum credit card payment Peer-to-peer lenders and credit unions are great options for debt consolidation loans - Hidden fees from less reputable companies can make loans more expensive HOW MUCH CAN A DEBT CONSOLIDATION LOAN SAVE YOU? The chart below shows your savings based on a debt consolidation loan of $10,000 vs. paying minimum payments on credit cards.* $12,793 $2,365 $1,003 PROSPER PROSPER CREDIT CARD 3-YEAR LOAN 5-YEAR LOAN Debt consolidation loans through Prosper's peer-to-peer community have no hidden fees, and are funded by people like you. Visit www.prosper.com for a free rate quote. PROSPERD Sources: Credit.com, NerdWallet.com Annual Percentage Rates (APR) by Prosper Rating range from 6.73% (AA) to 35.36% (HR) for first-time borrowers. To qualify for an AA Prosper Rating, applicants must have excellent credit and meet other conditions. The above example is based on a five-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 8.69% (9.99% APR) and 60 scheduled monthly payments of $206. The above three-year $10,000 loan with a Prosper Rating of AA would have an interest rate of 6.31% (6.99% APR) and 36 scheduled monthly payments of $306. Rate offered is based on Prosper Rating and other factors, and your actual rate may differ. All personal loans are made by WebBank, a Utah-chartered Industrial Bank, Member FDIC. All Prosper personal loans are unsecured, fully amortized personal loans. * According to the Bankrate.com Minimum Payment Calculator (http://bit.ly/wBsq2). This estimate assumes a 16.00% interest rate and a minimum payment equal to 1% of the outstanding balance plus any new interest. Your actual minimum payment, payoff time, and payoff cost will depend on your account terms and any future account activity. DOLLARS HOME CREDIT INTEREST YOU'LL PAY