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4 strategies for reducing credit card debt

Buying on credit has become the norm for Pennsylvanians. Nationally, the average person holds over $2700 in credit card debt. Unfortunately, with interest rates ranging from 13 percent to 20 percent annually, items purchased on credit can end up costing up to three times their value.

Reducing credit card balances can be an important step toward ensuring greater financial security and improving credit scores, which in turn can have an impact on home mortgage rates, other loans and even employment. Consumers can start by surveying their cards, determining the APRs on each one and working to pay off balances on cards with the highest rates first. A second strategy is to take advantage of balance transfer offers that allow you to move debt with a high interest rate to a card with a much lower rate. The fee for the transfer, usually 4 percent of the balance, is usually outweighed by the savings of reducing the higher APR.

A third option is to borrow from one's 401K retirement account. Loan rates are usually good, and interest accrues to the borrower. Finally, a person can consider a home equity loan. The advantages of this option have to be weighed against the closing costs that come with the loan and the risk of a home losing its value.

Credit card debt can be a stress on finances. Bankruptcy may be a viable option for debt relief in many cases. An attorney may be able to help a person in these circumstances decide whether declaring bankruptcy might be an appropriate solution. That attorney might discuss the benefits of the process and file the necessary paperwork in court.

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