If you need help with consolidating credit card debt, find some of the leading methods, top tips and discover ways how to consolidate.
If you decide to enter into a credit card debt consolidation program or use a third party to do this, expect that that they will do the best that they can to help you. Many consumers receive help as they will now be able to avoid the need to have to pay higher interest rates and expenses on their credit card bills. What you will do, or the company on your behalf, is negotiate a loan with a lower interest rate. This new loan will be the only bill that you need to pay on a monthly basis.
Many businesses, including non-profit credit counseling agencies, will help individuals get credit card debt help. They will usually operate as some type of consolidation company (either private or non-profit) and they focus their services on people that would like to obtain lower interest rates on their credit cards and pay less in interest expense. The company you work with will communicate with the collection agency and/or your creditors, and the company will also arrange for you to receive lower interest rates as well as a more affordable payment plan.
The various steps that you will follow in a credit card consolidation assistance program are somewhat the same as those in a so called “general” debt consolidation program. As with any help you ever receive, you need to be sure to ask questions and also to do your research so that you are aware of how the consolidation program works before you sign up with the service provider or enroll in the program.
There are several pros and benefits of credit card debt consolidation programs, and they include:
1. You should be able to get late fees waived and get back on track with making timely payments.
2. You will be able to pay off the credit card bills and debts with a lower overall interest rate and costs.
3. You can consolidate multiple bills and financial obligations into one monthly bill for a more manageable payment.
4. You will not be harassed by phone calls from debt collectors. Find more ways to get help from debt collectors.
After you sign up for and enter into some form of debt reduction and/or credit card consolidation program, you will then need to pay your monthly payments directly to the company that you are working with. You will no longer have to continue dealing with each individual creditor or lender. You will also not need to pay multiple bills on a monthly basis. The company that you choose to work with will take care of communicating with the various other creditors and lenders on your behalf. You will need to pay that company, and they will then send your monthly payments until the bills and debts have been paid off in full.
You can also decide to consolidate your credit card debt on your own. This is possible to do, but in order to do this you will need an available account with a large enough balance. This is required so that you can hold and transfer your other debts on this one account. This additional account also needs to be at a lower overall rate than what you are currently paying or it will defeat the purpose.
The next step is to then transfer the outstanding balances to this single account and then to close all of the other, now unused accounts. After you do this, you will then just need to make your single payment each month. Since it is now only one payments, the process will be less complicated, easy to do, and saves times and money. It is easier than having to deal with several bills at once. Of course, you also need the lower interest rate on the account as after all your primary goal is to pay as much as possible towards principal (not interest) to try and reduce your credit card and other debt as quickly as you can. Find the best low interest rate credit card accounts.
If you decide to take this approach, when you do transfer your outstanding credit card balances to one account, you should not close every open account all at the same time as it could impact and lower your credit score and ratings. Even more important, for the account that you decide to consolidate to, you need to ensure it has a lower interest rate during a long enough duration of time. Also ensure that it doesn’t jump up to a high interest rate after only a couple of months of time. As always, make sure you read the fine print, understand all of the terms of the new loan, and also be sure to read the application carefully before signing up or transferring balances.
Yet another common option for debt reduction and credit card consolidation is to apply for and get a so called debt consolidation loan. Instead of transferring balances to a credit card, or using a card to reduce your overall debt levels, this is a completely new and separate loan. In order for this approach to work it needs to be issued at either a lower interest rate or have a longer repayment period, which will in effect reduce the monthly payment.
You will need to use it to pay off all other bills and debts that you may have, including any balances on your credit cards. So this acts as a form of consolidation.
This new loan is very similar to a personal loan and it will offer people a longer timeframe to pay off and eliminate all of your bills. Because the payment terms are spread out over a longer period of time, the payments can be lower than all your currently combined credit card payments or other bills. Even better, if you decide to get a personal loan using collateral, such as a home equity line of credit or a second mortgage, you may be able to get a comparatively low rate of interest.
One of the downsides to this option is that while your monthly payment will be lower, you will more than likely be paying off the outstanding debts over a longer timeframe so your total interest paid in absolute dollars will be higher.
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