 TITLE: How to Get Out of Debt - Experian CONTENT: 3\\. Reduce Your Interest Rates\n------------------------------\nHigh interest rates can cause your debt to grow rapidly, especially if you have a lot of credit card debt. When you're paying a lot in interest, it can be difficult to pay off the principal.\nHere are some common types of higher interest debt and tips for how to reduce the interest you pay on each:\n### Credit Cards\nYou have a few options for reducing credit card interest rates:\n*   **Ask the credit card issuer for a lower rate.** If you have a good payment history with them and good credit, they may agree to lower your rate for a period of time, or even permanently. Calling your issuer and asking for a lower interest rate costs you nothing and doesn't affect your credit report or credit score.\n*   **Consider a balance transfer credit card.** If you're not able to secure a lower interest rate from your current credit card company, you may be able to transfer outstanding credit card balances to a balance transfer card with a lower or zero interest rate. Credit card companies often offer promotional rates for a limited period in exchange for you transferring a balance from an existing card to a new one. You'll need to meet the balance transfer card company's qualifications, and you'll probably need to pay a transfer fee of around 3 percent of the balance you're transferring.\n*   **Look into a debt consolidation loan.** This option can be another way to lower your interest rates because loans of this type typically charge lower interest than credit cards.\n### Student Loans\nWhile certain types of student loans can have fairly low interest rates, if your student loans are older, your rates may be higher. Additionally, if you have a high principal, the interest can quickly add up.\nDepending on your income and the type of student loan you have, you may be able to apply for an income-driven repayment plan on StudentLoan.gov that will lower your monthly payment. You must be current on your student loan debt to qualify, but you could reduce your monthly payment without incurring a penalty or harming your credit score.\nYou may also be able to obtain a debt consolidation loan if you have more than one student loan. Consolidating multiple student loans, which you can also apply for through StudentLoan.gov, will allow you to have a single monthly payment at a fixed interest rate that's based on the average of the interest rates on the loans you're consolidating. There's no cost to consolidate multiple federal education loans into one loan. However, you may lose certain student loan benefits, such as the ability to defer repayment.\nYou may also apply for a debt consolidation loan from a bank or other financial institution that combines your student loans and other debt, such as credit card debt. If you go this route, however, you may lose student loan benefits, such as the ability to defer repayment.\n### Debt Settlement\nIf you're looking for help dealing with high interest rates and difficult-to-manage debt, you may wonder if debt settlement is a good option for you. Some debt settlement companies advertise that they will negotiate with lenders on your behalf to get your payments reduced. With debt settlement, you go through a third-party company to pay your creditors a lump sum, usually an amount less than the total you owe, to settle the debt. While debt settlement may make it easier for you to pay off your debt, it does have some significant credit consequences.\nWhenever you pay less than the full amount you owe—which you agreed to pay when you entered into a credit agreement with the lender or credit card company—the settlement appears as negative information on your credit report. Negative information can contribute to lower credit scores.\nInstead of diving into debt settlement, a better option might be to talk to a nonprofit credit counselor. Credit counseling organizations can help you better understand tactics for managing and reducing your debt, such as creating and following a budget, and they may help you avoid the negative impact of debt settlement\nCredit counseling organizations also offer debt management plans, which are typically for those deep in debt. A debt management plan can reduce the number of payments you have to remember each month. A credit counselor from a government-approved list will negotiate with your creditors to see if they'll accept reduced interest rates or monthly payments, waive fees or reduce the amount you owe. Then you pay the credit counseling agency once a month and the organization distributes the funds to your creditors per their agreement. If you enroll in a debt management plan, it could appear on your credit report. For more, see \"A Debt Management Plan: Is It Right for You?\" END