found at zwire.com  Apr 21, 2007

Although high-rate credit card debt can quickly grow if a balanced is carried, credit cards are also handy money-management tools when used wisely. Credit card holders can take advantage of the interest-free loan period from when a purchase is charged and the time the monthly balance is due. Credit cards can be very convenient as they help supplement cash flow and usually have other features that can save money. Examples of extra benefits are free purchase protection insurance, extended warranty, gift certificates, merchandise redemption and travel rewards. However, careless credit card use can lead to financial difficulty because credit card interest is higher than other types of borrowing.

For those with significant card balances or other high-rate debt, one of the best ways to get it under control is to consolidate borrowing. One solution is taking out a lower-cost, unsecured personal loan at a financial institution, and using it to pay off existing debt. This will significantly reduce interest costs and make financial life less complicated, because there will be fewer payments to worry about every month. In essence, this strategy rolls a number of separate bills into one payment.

Another option is to pay off high-rate debt with a secured loan, such as a home equity line of credit.

It may even be possible to trade higher-rate personal loans for lower-rate debt. Although this may not work when rates are rising or stable, it is a viable strategy when rates decline and new loans become cheaper than existing loans. Consider taking out a new loan at a lower rate and using it to pay the outstanding balance on an existing loan. Financial institutions may allow refinancing a loan at lower rates; if not, consider borrowing from another institution.

Another money-saving strategy is to use tax-deductible debt whenever possible. Interest on funds borrowed for investment purposes, such as investing in securities or rental real estate, may be tax-deductible. It may also be possible to convert non-deductible debt into deductible debt. For example, it may be possible to sell investments to pay down a non-deductible mortgage and then borrow the same amount to repurchase investments.

It's important to note that leveraging can be a risky proposition and is not suitable for everyone. Anyone considering such a strategy is encouraged to consult a professional.

Those requiring help with debt can speak to a financial advisor, or, they can get help from a credit counsellor. The sooner people get out from under a mountain of debt, the better.

--Provided by Darryl Craig, investment representative, Edward Jones. Member CIPF