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Tips to manage credit card debt

(ARA) - Loan consolidation has its ups and downs, but, if handled properly, it can help a family afford to get out from under debt.

The average American household had $8,329 in credit card debt in 2008, according to the Nilson Report in April. And that didn't depend on if the household currently had an active credit card open.

"Debt control and management is a possibility for everyone," says Daniel Wesley at CreditLoan.com. "And there are many resources available - ranging from credit consolidation companies to credit counselors - that can help people bring their debt to a manageable level."

Some tips to help evaluate if debt consolidation is an option for you are:

* Get organized

List all the debts you have, all the interest rates you're paying and all the annual income your family brings in. Having all this information in front of you will help you to determine the best steps for bringing your debts under control.

* Do the math

Calculate the interest rates for all the debts you're paying now, and then calculate what your new interest payments will be for all the different consolidation options. The concern is that the new single interest rate through your credit card or bad credit loans will probably be a higher amount, so you need to make sure your overall payments are fewer than what you're currently paying on multiple debts.

* Determine the risk

You can consolidate all your debt to one credit card that has a lower interest rate now, but there is the risk that those rates will increase in a year. And if you don't have your debt paid down that quickly, this type of consolidation probably won't make the best sense. Another type of consolidation is taking out a home equity loan, but with this, you have the risk of your home being taken away if you default on the payments.

Courtesy of ARAcontent

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