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It is all too easy to be swallowed up by credit card debt and an ever increasing number of people find themselves in just this situation. If you are one of these people, take some consolation in the truth that you are not alone, you are not the first and you certainly will not be the last. That being said, the fact of the matter is that when you are facing what seems like insurmountable credit card debt you feel alone and worried. It may seem more comfortable to bury your head in the sand and ignore your debt as if it did not exist but trust me when I say this, your debt will not go away and by not dealing with the issue now it will cause you so much financial aggravation in the future the way you feel right now will be feel like a pin prick in comparison!

Lecture over! So what action can you take to get back on track?

Of the many tools available to people with this problem the one that stands out as the best option is that of credit card consolidation. There are three different types of credit card consolidation; all have the same goal of reducing your monthly repayment and making your debt much easier to manage. All three are completely different and all suit different financial situations;

The credit card consolidation loan:

Ask an experts' opinion, and they will tell you that a credit card consolidation loan is the most advantageous of the three options available and is definitely the best option of the three to pursue. They work by simply paying off all of your separate credit card debts by using a single loan. This will result in a much lower monthly repayment, a much easier to manage debt, and one single monthly repayment to worry about instead of any number of credit card accounts and above all, you remain in total control of your finances at all times.

There are two types of consolidation loan; secured and unsecured. Unsecured loans are deemed the more favorable as you will not need to put up any security or collateral in order to borrow; but your credit score will need to be good and your job secure in order to obtain one.

Unfortunately, as we are all under a dark economic cloud at the moment, unsecured loans are becoming more difficult to obtain because the financial institutions are becoming extremely picky about who they lend to, if anyone at all it seems!

Alternatively there is the secured loan. Although easier to obtain than an unsecured loan you will need to put up security. This security is often the equity in your property but can be anything from your car to family heirlooms such as jewelry.

The major benefit of a secured loan is that they generally have the lowest interest rates of any loan and will therefore save you even more money each month, but you are always in danger of losing your collateral should something unforeseen happen and you are unable to keep up payments, so if your job looks somewhat precarious proceed with caution.

The Consolidation Service:

Consolidation services are provided by companies that will consolidate your debt by negotiating improved interest rates (lower) and terms with your creditors, therefore reducing your monthly payment considerably.

They will then ask you for a monthly payment that they will divide between your creditors, as per their negotiated agreements with those creditors. This is a good alternative for those who are unable to get a loan for one reason or another and does provide similar monthly savings but the downsides to such services are as follows: 

You will be charged every month for this service, whilst you use it, although some states do have a limit imposed on this charge. In California for example you will not be charged more than $20 a month.
You are handing over control of your credit card debt and are therefore not in the driving seat.
There are many 'scam' operators out there currently ripping desperate people off, so you will need to show caution when choosing who to use.
Your debt will take considerably longer to clear than it would with a consolidation loan, meaning you will pay more.
You will not save as much money as you would with a credit card consolidation loan.
The credit card balance transfer consolidation method:
OK, seems a bit of a mouthful but this method has been around a few years now and has been used to great effect; shaving literally thousands of dollars, pounds, euros or whatever denomination; off individual credit card debts globally.

This method has its origins during the time when credit card companies first started to chase their competitors' customers by offering very lucrative balance transfer offers. It was not uncommon to have a large number of companies all offering 0 percent balance transfers at the same time and for the savvy credit card user it was like a dream come true as they switched from one deal to the next, never paying any interest, in a couple of words..Free credit!

It was never going to last.

Those early days of continually jumping from one card to the next have passed and credit card companies have since made it much more difficult for people to jump on a regular basis, but it is still possible, however, to save yourself some money and reduce your payments using better credit card deals.

By transferring all your high interest card balances to a single low interest card you can save yourself a lot of money but you should always do the math first to ensure you come out of a transfer in a better shape than when you went into it.

Look out for balance transfer fees, time sensitive offers, post offer interest rate increases, high interest rates on purchases and hidden penalty charges. All of these could make what looks like a great deal into something more likely to cause you to have a financial meltdown!

The biggest downside of using this method is that it does require a degree of calculation on ones behalf to make any substantial savings and no matter how good a deal you manage to find, you will still be paying more than if you had a loan.

So, there you have, the three most used methods of consolidating credit card debt but whichever avenue you decide to venture down always remember than none of them will stop you from getting into a financial mess again, that is down to the individual and how they use their credit cards.

A credit card will give great financial power but with that great financial power comes an even greater responsibility! Corny I know but it's true.


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