It was found out in a recent study that 56% of Americans have never owned a credit card while another 44% have debts which are way too much than their incomes can afford. When we talk about debts, the first thing that comes into mind is credit card debt. With more Americans carrying more than one credit card, very few realize that it is the interest rates compounding which makes it hard to pay off their debts. Very few people know that aside from the annual service fee, every purchase they make using a credit card is charged around 5% if it remains unpaid in full at the end of the billing cycle. Imagine buying 5 items and not paying them on their due date, you will accumulate 25% interest in just a month.

As more Americans seek for debt relief, credit counselors from the government are starting to educate credit card users and urging them to practice debt consolidation in order to prevent them from approaching the state of bankruptcy. Bill consolidation, as the name implies consists of taking out a single loan to pay off all the others. It can be done in a number of ways:

1. Getting a home equity. This is a type of secured loan where in the house becomes the collateral. Because the lender takes lesser risk in this kind of loan, loan amounts are usually bigger and interest rates are lower. This is the most preferred method of debt consolidation for people who owes too much and is in danger of bankruptcy.
2. People who are working might be able to borrow their retirement plan from their place of employment. In most cases, this is favorable due to low interest rates but since you are borrowing from your own funds, the amount you get on your retirement is much lower than that of your colleagues.
3. You might also be able to borrow against your life insurance policy if it accumulates cash value. You will have to consult your insurance agent for this.