© Andres Rueda

Bad spending habits often land you up in credit card debt. There are various options available to consolidate your credit card debt, if you own a home with some equity, then opting for a home equity loan is one most savvy move to clear your credit card debt and get back to a sound financial state.

As you opt for consolidating your credit card debt with home equity, it offers you ample cash amount that you can use to clear of your credit card debts. At times home equity loan is referred to as a second mortgage which can effectively take place of various other consumer loans it can also help in reducing your federal tax.
Various advertisements claim to fix your credit card debt problems via home equity loan but experts suggest 66%-80% of such consolidation programs fail.

Surprisingly, several American consumers are unaware that they can face a credit card debt by using their credit card to pay taxes.

© GDS Infographics

As reported by Gannett News Service, 98% of the debt revolving in the American economy is attributed to credit card debt, which stands at USD 800 billion currently. Experts believe this is making American consumers pay for their holiday shopping by cash rather than credit cards this year. Nevertheless, American consumers, often fail to understand that they can actually face a credit card debt for using their credit cards to pay taxes instead.

Third-party providers handling credit card payments to the IRS charge a processing fee of 2.35% to 3.93%. This adds to the credit card's balance. Now, if the credit card's balance is not paid fully at the end of the month, an interest is charged on the balance depending on the account's Annual Percentage Rate. Hence, it is paying taxes using a credit card that is immensely expensive leading to an upcoming credit card debt.

© Robert Scoble

It may seem strange to think that credit cards help consumers to manage their money better, but that is the new pitch being used by banks to sell their cards to more frugal consumers. Credit card companies like TD Bank have in the past made their money from enabling what is in some cases reckless spending, yet TD is now offering a card that promises to help users pay down debt. Then there is the Blueprint card from Chase that supposedly allows people to manage their daily spending and save for big purchases.

The banks are even targeting cards for teens that are designed to teach them how to use credit responsibly. All of these new cards are aimed at easing consumers back into using credit after a period of over-leverage that has led many to cut back on their card use. While credit card volumes are again on the rise, they are not back to the 2007 highs.