What started out as a convenience for people to make purchases without carrying huge amounts of money has now become a burden to some of them. The humble credit card, when used without ever checking to see how much balance remains on it, can lead one to huge amounts of debt. And there is any number of people around who will tell you first hand just how difficult it is to get out of debt.

However, the good news for such people is that they can consolidate the debts on their credit cards into one account for better money management and the lowering of interest rates. Here are three known ways that people usually use:

Transfer the balance to a new card: Here, you apply for a credit card and transfer the outstanding balance from there to a new card which gives a zero interest rate or a low interest rate for any new transfer of balance. This dramatically lowers the interest or eliminates it during the initial period of six months or for the duration of the transferred balance. This helps you reduce the amount of monthly interest you pay on your outstanding balance.

Ask for a home equity loan: This presupposes you have a house. This method gets you a lower interest rate than what your credit card fetches you and can also take care of a larger debt amount. It also gives you the benefits of tax deductions on the interest rate of the new home equity loan.

However, adopting this method means that you will offer your house as collateral. Lenders classify such loans as low risk, giving you the benefit of a low interest rate, easy approvals and a long period to pay. However, this option is only open to you if you own a house, not if you live in a rental or if you have just purchased a home and do not have adequate equity.

Opt for a debt settlement program: By opting for debt settlement, you choose to not pay your individual creditors each month but consolidate all your debts into one and make monthly payments to a trust account. When the money accumulates to a certain amount, your debt settlement company negotiates with your creditors and offers it as a final payment, although it is a reduced amount.

However, to qualify for this, you need to have a minimum debt of $10,000. Secondly, your minimum monthly payments should be in arrears. If you meet these two criteria, you can go in for debt settlement.

Advantages:

• By opting for this, you get rid of a large proportion of your debt, up to about 50% on average and sometimes going up to 70%.
• The interest is eliminated in the early part of the negotiations.
• Debt collectors no longer call you.
• Your home or other personal property is not at risk if you default on your payments.
• Service fees to a debt settlement company are usually paid at the end of the agreement, after you have paid your dues in full.
• As you pay promptly each month, your credit report starts looking good.