Being in credit card debt can be a stressful situation. This is one of the easiest debts to fall into because the appeal of acquiring a product and paying for it at a later date is quite high. What consumers fail to remember is the fact that the interest rates on their purchases are very high.
Purchasing through credit cards requires discipline and a strict payment behavior. There is a grace period wherein you are allowed to pay for your credit card purchase without a finance charge on the first billing statement after the act. If you fail to pay for the whole amount within the grace period, that will incur a high credit card interest rate that will keep piling up as long as you have a balance.
Credit Card Consolidation Options
When you find yourself deep in credit card debt, there are a couple of credit card consolidation options for you to consider.
One of them is taking out a big loan to pay for the small ones. This is called a consolidation loan. Most of the time, you need to have either a good credit standing for an unsecured loan or a collateral to take out a secure loan. Ideally, taking out a debt to cover for another one is not really a solution but it will help you manage your monthly payments. The goal is to get a lower monthly payment and have all your credit card debts consolidated under one payment term.
Another option is transferring your credit card debt in under one card with the lowest interest rate. You need inquire with banks and credit card companies regarding promos like 0% for the first 5 months or something similar. Again, the goal here is to come up with a lower monthly payment that you can afford.
These debt relief efforts can work but if you address the real situation: your spending habits. It is very easy to fall back on your old ways but if you have a budget plan that will help you manage your finances, you may be able to get out of debt entirely.
FAQs on Credit Card Consolidation
Who can apply for credit card consolidation programs?
Getting in touch with a credit card consolidation company will tell you if you qualify for this program. They will help you assess your financial capabilities to figure out if you can afford to pay for your debts. Usually, the qualifications are either a good credit standing or the possession of a collateral. However, there are companies who will agree to help you despite the absence of these two – but that will entail high interest rates on the payment term. If your total debt cannot be covered by your current income, you may be asked to enter into a debt settlement program or declare bankruptcy.
What will happen to my creditors and the collectors if I enter into a consolidation program?
If you hired a company to work on your behalf, they will stop harassing you. Instead, they will be coordinating with the debt relief expert assigned to you by the consolidation company. They will also be kept from taking legal actions against you – as long as you keep paying your dues.
How long will a consolidation program take?
This is depend entirely on your payment capabilities and the total debt that you owe. The average period usually lasts 4-6 years.
Can the credit cards be used while enrolled in a consolidation program?
Yes. However, the debt relief expert will advise against it because it will affect your monthly payments and the length of your payment term.
Will the monthly payment be fixed or can we increase the payments?
Definitely, you will not be allowed to pay any lower than the agreed amount but you can increase that. Talk to the debt relief expert if you can increase your monthly payments so you can get out of debt faster. They will coordinate with the creditor on your behalf. In the event of a crisis and you need to lower the monthly payment, inform them as well. They will negotiate with the creditors and prove that a new financial crisis rendered you unable to pay off the current terms.
While it is possible to accomplish a debt free life on your own, enlisting the help of a debt relief expert to guide you through the process will prove to give you better results. They will assist you in creating a budget plan that will list your income, expenses and total debt. Together, you can identify how much you are allowed to spend every month to ensure that you no longer add to your debts.
National Debt Relief is a debt management company specializing in debt management. We have debt relief experts to help you get out of debt. Give us a call or fill out the short form on this page. We will have someone get in touch with you to discuss your financial situation. The initial consultation is free!