The Truth About Credit Card Debt Consolidation

If handled right, credit card debt consolidation can make your debt problems go away forever. Without a doubt, credit cards are the biggest contributors to personal debt. We live in a society where instant gratification prevails and we know that the easiest way to get what we want – when we want it – is to charge it!

But like it or not, the convenience comes at a high price. That high price is the interest rate that accumulates on the outstanding account balance. Just take a look at your credit card statements and you’ll see that you’re paying upwards of 20% interest on most of these cards! Paying just the minimum amount due on a high interest credit card with a balance of a couple thousand dollars takes years to repay, and yet, most people can only afford the minimum amount due. If that’s your situation, you owe it to yourself to learn how credit card debt consolidation can help.

Advantages of Credit Card Debt Consolidation

Credit card debt consolidation means taking your existing credit card debt and paying it all off with the funds acquired from a debt consolidation loan. Typically offering interest rates in the single digits, you use the funds from this lower interest loan to pay off the balances of your higher-interest credit cards. In doing so, you bring these balances down to zero which stops the incessant calls from credit collectors and reduces your stress and anxiety. Doing go also prevents further damage to your credit history and stops other fees from accruing such as late fees.

With the credit card bills repaid, you can now focus on repaying just one bill every month: that of the credit card debt consolidation loan. Ideally, you should pay as much as possible towards this balance as interest still accrues on the balance owed.

If you’re interested, applying for a credit card debt consolidation loan is easy. You’ll fill out an application listing your debt, your employment and income, and other personal information. Don’t lose track of the fact that you’re applying for a loan and to be approved, you’ve got to show that you’ll be able to repay it!

Make sure you know whether you’re applying for a secured or an unsecured credit card debt consolidation loan. Be sure you fully understand the terms before you apply. Rates for secured loans are typically more favorable than those associated with unsecured debt consolidation loans. That’s because with a secured loan, you’re putting up a major asset such as you home as collateral.

Disadvantages of Credit Card Debt Consolidation

As with all good things in life, credit card debt consolidation does have its drawbacks. Most importantly, you can still be in default (and further damage your credit history) if you fail to repay the loan as agreed. And you could lose your home!

A credit card debt consolidation plan won’t do you any good if you aren’t willing to change your spending habits, either. Remember, the only guaranteed way out of debt is to spend less than you take in!