debt consolidation can help resolve your credit card debt problems.
Your financial situation is different from someone else. The credit card debt relief service that works for someone may not be the best choice for someone else. You should take the time to understand all the debt relief options available to you to find the best solution for your needs and goals.
Credit Card Debt Consolidation Guide Locator
What Is Debt Consolidation?
Consumer debt consolidation (often referred to as debt management) is a process of combining your unsecured debts into a single, larger debt (loan) with a more favorable interest rate, payment terms and lower monthly payment. Examples of unsecured debts that can be consolidated include credit cards, personal loans, medical bills and some types of student loans. The goal of debt consolidation is to improve your financial situation by lowering your TOTAL costs of financing your debts.
Consumer debt consolidation simplifies loan repayment, offers a means of reducing your average interest on your unsecured debt, usually lowers your total debt costs and helps you get out of debt faster. There are many factors that come into play to get you the best possible average interest rate. These factors include the type of debt, your income, credit score, payment discipline, and other factors.
Credit Card Debt Consolidation
Other Non-Secured Debt Consolidation
How Does Debt Consolidation Work?
Consumer debt consolidation is simple in principle. You borrow money and pay off your credit card debt balances and remain with one, often larger debt, to pay off. Ideally, this single payment will have a lower interest rate than your unsecured debts, so you’d pay less in interest while paying down the debt. The main goal is to reduce or eliminate the interest rate applied to the balance. This makes it faster and easier to pay off credit card debt.
In many cases, you can get out of debt faster, even though you pay less each month. Credit card consolidation essentially gives you a more efficient way to eliminate debt.[/vc_row]
Do It Yourself Option
Debt Management Program
Simplify the payment process on your multiple unsecured debts.
Lower the total interest charges on your consolidated unsecured debts.
Reduce the time you need to cancel your unsecured debts.
Lower your monthly payments and improve your cash flow.
Improve your credit profile if you consistently meet the terms of debt consolidation loan.
Help you achieve long-term control of your financial future.
Reduce your total non-secured debt. It is simply refinanced into a larger non-secured debt.
Does not guarantee that the interest rate of the debt consolidation loan will be lower than the aggregate of your non-secured debts. The lender will determine the interest rate based on your credit profile and other factors. If the rate is not low enough, this is not the right debt relief solution for you.
Prevent you from adding to your total non-secured debt after consolidation. A debt consolidation loan term ranges from 36-60 months. It requires discipline to not add more unsecured debt, particularly new credit card debt.
Deal with the the cause of excess credit card debt which is lack of financial discipline.
Most Americans carry an excessive amount of credit card debt. While convenient as a form of payment, it is an expensive type of debt to use and requires financial discipline. Many lack this.
Debt consolidation is not the same as debt reduction. The amount of credit card debt being financed remains the same. It simply moves from several small to one large personal loan. It is a matter of how expensive (interest charges) it will be for you to pay off the debt. The debt still needs to be paid off. It didn’t just disappear.
Debt Consolidation will not eliminate your unsecured debts but will help you get them under control. It can be a successful debt relief option when:
- Your unsecured credit card debts are at least $10,000 or greater.
- You can consistently support the debt consolidation loan without resorting to new credit card purchases for your other monthly expenses.
- The debt consolidation loan APR should be significantly less than your credit card accounts.
- You have the discipline to not use credit cards until the debt consolidation loan is paid off.
Debt consolidation, when used properly, should improve your credit profile with time.
With the debt consolidation loan funds you will be paying off multiple credit card accounts. This is positive for your credit profile.
The multiple credit card accounts should be kept active rather than canceling them. Each of these credit card accounts has an unused credit limit. The sum of these unused credit limits increases your total amount of available credit. This lowers your Credit Utilization ratio, where less than 30% is positive for your credit profile. You improve your “credit worthiness” as a consumer.
You need to be consistent in your payments of the debt consolidation loan, otherwise this will be negative for your credit profile.
As your credit card balances are paid off you should do a thorough review of your credit report to ensure that the accounts are probably updated. Delays and mistakes can happen
And finally you need to avoid the biggest mistake people make after consolidating credit card debt. That is, not stopping making new credit card charges.
Debt consolidation is to allow you to focus on eliminating, not adding to your credit card debt.