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Three ways to tackle credit card debt

Today, it is ideal to live a debt-free life. However, because many Massachusetts residents use credit cards, it is very common to carry a balance of debt. While many individuals rely on credit cards to cover certain expenses, consumer debt can quickly get out of hand. Although credit cards are often the culprit for getting a person into debt, they can also be the tools used to get the consumer out of debt as well.

The average American carries roughly $16,000 of interest-bearing credit card debt, so it is essential that consumers take "big picture" approaches when tackling their debt problems. One way is to switch to using cash. Anytime cash is used and you get change back that is a $5 bill or less, the consumer should stash that away in a piggy bank or some sort of box. The idea is that this will accumulate over a period of time, allowing the consumer to set aside money to pay off some or all credit card debt.

Another money saving tool is known as the 5 percent ratchet. This requires the consumer to take 5 percent of income and set it aside in savings. Ideally, this amount should go up each month until it becomes too much. That way consumers will know their breaking point when it comes to savings and their cost of living. Additionally, it will allow them to put aside money that will help them pay down or eliminate credit card debt.

A third and final option is a balance transfer credit card. This allows the consumer to transfer the interest-bearing debt from one card to one that has a promotional period of 0 percent interest. This is a very powerful way to get a handle on credit card debt.

While there are a variety of ways to address credit card debt, not all of these options are viable for all debtors. Therefore, it is important for debtors to consider all the options available to them, even if they are less appealing. Filing for bankruptcy can open up many opportunities and could be a viable debt relief option.

Source: Nasdaq.com, "3 Simple Ways to Cut Credit Card Debt Faster," Nathan Hamilton, March 24, 2017

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