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Debt Reduction and Credit Card Consolidation

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Debt Reduction and Credit Card Consolidation Powered By Docstoc
					The Differences between Debt Reduction and Credit Card Consolidation

Using credit cards to consolidate your debts is not as effective as debt
reduction. Credit cards often have high rates of interest, and will often
lead you into deeper debts. In fact, credit cards are one of the leading
causes that debtors seek out debt consolidation solutions.

Debt reduction means that you are working to decrease your bills, not add
or keep the bills in existence by using another source to pay off the
debt. Therefore, instead of considering credit cards as a source for debt
consolidation, you must find a way to reduce your debts.

Let's say you owe money for your mortgage, car payments, insurance,
utilities, and other bills that add up to $1200 per month. Now, is there
a way we can reduce this amount? Absolutely, but can we find a mortgage
that will refinance our loan and help us to combine our monthly bills
into one payment?

Yes. There are loans available that offer cash back, underpayment, and
overpayment plans; as well as loans that will wrap your bills into one,
combining the bills and adding them to your monthly installment.

Do not misinterpret this: your utilities are your responsibility, but for
the most part, your car payment, mortgage, and any credit cards or other
loans will be rolled into one monthly payment. Therefore, if you're
paying out of the $1200 up to $800 per month toward car payments and
mortgage, you may find a lender who will reduce this amount to $600 more
or less per month.

Furthermore, if you land a loan that offers cash back, you can use this
money to payoff your debts.

Finally, utilities can be reserved and grocery bills can be reduced. In
addition, insurance coverage can also be reduced. Therefore, debt
reduction is wiser than credit card debt consolidation in the long run.

				
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posted:5/30/2010
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