The average American household has 12 credit cards. Over half of these households have trouble making the minimum monthly payments, and many are using plastic to cover daily living expenses such as groceries, household supplies, gasoline, car repairs, and co-payments for doctor visits. If you are having debt problems, now might be the time to stop this destructive cycle and get the help you need from a trusted and FTC-compliant debt settlement company. This article explains how debt settlement saves you more time and money than other forms of debt relief.

Suppose that you have $20,000 of credit card debt with two credit card companies at a blended interest rate of 23%. In order to become debt free, you have three options: making the minimum monthly payments, getting into a debt consolidation program, and using debt settlement.

First, let's look at making the minimum monthly payments. Suppose that the smallest amount you can pay each month is $500. Using this formula, it will take you 44 years and 8 months to pay off your credit cards. And what's even worse, you will pay a total of $57,050.05 in interest, in addition to the $20,000 that you already owe. That's a grand total of $77,050.05!

Now, let's look at debt consolidation or interest rate arbitration. Debt consolidation takes your high-interest loans and/or credit cards and consolidates them into one, low-interest, monthly payment that you can afford. The payment is made to the debt consolidator, who sends the funds to your creditors.

Using the example above, let's say that a debt consolidator negotiated a new blended interest rate of 12% on your $20,000 credit card debt. If you continue to make a $500 payment every month, it will take you 21 years and 9 months to pay off your credit cards. You will pay $12,488.92 in interest, in addition to the $20,000 that you already owe. That's a grand total of $32,488.92.

Let's compare debt consolidation with paying back your balances in full.

Originally, you paid $500 a month at a blended interest rate of 23%. You are now paying $500 a month at 12% interest.

Originally, it would have taken you 44 years and 8 months to get out of debt. With interest rate arbitration, it will take you 21 years and 9 months to become debt free. This is a difference of almost 23 years.

Originally, you would have paid $57,050.15 in interest, in addition to the $20,000 that you already owed. That's a grand total of $77,050.05. Under the revised plan, you will pay $12,488.92 in interest, and a grand total of $32,488.92.

Now, let's look at debt settlement, also known as debt negotiation or debt resolution. This form of debt relief allows you to make one monthly payment, and to get out of debt much faster than by making the minimum monthly payments or by using debt consolidation. With a debt settlement program, negotiators communicate with creditor(s) on your behalf to settle your balances to reduced and "agreed-to" amounts.

Here is how it works: Your debt negotiation team opens a trust account for you. You must deposit a portion of your outstanding debt (usually 50%) into the account over a specified time period (generally 2 - 4 years). Once the required amount has been deposited, your debt negotiators communicate with your creditors to settle your balances to reduced and "agreed-to" amounts.

If your creditor(s) agree to the reduced amount, you must pay what you owe on the scheduled date. After the debt is paid, your creditors will update your account as "paid in full" or "paid as settled."

Using the example above, suppose that you use debt settlement to reduce your $20,000 credit card balance. Your negotiators require you to deposit $10,000 (50% of your debt) into a trust account. If you deposit $500 every month into the account, it will take you 1 year and 8 months to reach $10,0000.

In addition to the $10,000 that you deposit into the trust fund, you will also pay a fee to the debt settlement company for its services. Let's say that the fee is 50% of the settled amount ($10,000), or $5,000. In spite of fees, debt settlement is still allowing you to get out of debt much faster than by making the minimum monthly payments, or by using debt consolidation. Remember, it would take you 44 years and 8 months to become debt free by making the minimum monthly payments, and almost 23 years by using debt consolidation.

This article has explained how debt settlement saves you more time and money than other forms of debt relief. Debt settlement has worked remarkably for thousands of people over the years. But like anything worthwhile, personal commitment is required. For example, you might have to make saving money a top priority. How? Get a cheaper cell phone plan, use your health care spending account to the fullest, regulate utility use, watch bank fees, cut out the daily latte, take public transportation if you can, and so forth.