We here in America are on the brink of a new credit epidemic. In 2006 American consumers paid over 17 billion dollars in unwarranted penalty fees alone, besides the billions paid in interest. At this point consumer credit card debt has climbed well over 1 trillion and keeps going up. With the reform in bankruptcy laws in 2005 many consumers now have a much more narrow amount of options to how to climb out of the hole of debt.

For many denial is the state of mind that they are in until it’s too late. Most individuals do not believe they have credit problems until they look over their shoulder at a volcano of debt ready to explode. The common misconception with people in debt who have always made payments on time is that their credit is perfect. When in actuality having large amounts of credit card debts that are almost maxed out has a significant negative effect on obtaining any future credit.

The real problem lies within the credit card company’s minimum payment scheme. This payment scheme is intended to have the debtor trapped in debt for at least 38 years, and that’s with a average APR. Now raise the interest to the default rate and these debtors would be paying these debts long after their death. Losing tens of thousands of dollars in interest along the way, not to mention paying back the balance. A debtor really should learn more about the various options of debt reduction.

The good news for American debtors is they do have options, however the bad news is there is not many. The first option many consider is CCCS otherwise known as debt consolidation. With this method of debt reduction the benefits a consumer will have are to consolidate into one monthly payment and to have interest rates lowered. Another very attractive method is also debt settlement. Through debt settlement the debtor has a company negotiate on the credit card accounts to have the actual balance owed to be reduced. The primary advantage of debt settlement is the savings of money. Plus the huge savings of time, most debtors can foresee becoming debt free within two years.

Any method above would be far better than just continuing to stay on the credit treadmill. The credit treadmill is the pain staking cycle of minimum payments that was mentioned above. Anything is better than forfeiting tens of thousands of dollars and years of your life to cumbersome debts.

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