If you find yourself deeply in credit card debt, it can feel as if you have been shipwrecked and left adrift at sea. You’re trying to keep your balance on a plank without even knowing where you’re drifting. You’d love to get that credit card debt under control but you haven’t a clue as to how to accomplish this. Take a deep breath and relax. A debt consolidation loan could be just the solution you need and there are four good ways to get one.
A debt consolidation loan
First, you may be able to get a loan and consolidate all of your multiple credit card debts into one. These loans come as secured and unsecured. If you owe less than $10,000, you may be able to get an unsecured or signature loan. These are called signature loans because if you qualify for one, about all you have to do is sign for it.
In comparison, if you owe more than $10,000, you will probably have to get a secured loan, which is where you have to have some asset you can pledge as collateral. In most cases this will be your house in the form of a second mortgage or homeowner’s equity line of credit (HELOC). The biggest benefit of a debt consolidation loan is that you’re combining multiple credit cards that probably have high interest rates into one payment with a lower interest rate. Its biggest con is that you will likely take you anywhere from 5 to 10 years to pay it off.
Consumer credit counseling
On the face of it, consumer credit counseling may not sound like a debt consolidation loan. But it actually is. The way this option works is that you go to a credit counseling agency where you will be assigned a credit counselor who will help you develop a debt management plan (DMP). He or she will negotiate with your creditors to have them accept your plan and once they all do, you will no longer have to pay them. Instead, the credit-counseling agency will pay your creditors and you will pay it – in the form of one check a month. Once again, you will have a lower monthly payment than the sum of the monthly payments you’ve been making. However, it will take you probably five years to complete the plan. Plus, you’ll have to shred all of your credit cards and make sure you don’t take on any new debt during those years.
A third way to do a debt consolidation loan is to transfer the balances on your high interest credit cards to one with a lower interest rate. For that matter, many of the credit card providers are now promoting what are called 0% interest balance transfer cards. When you qualify for one of these cards, you can transfer the balances on all your cards with interest rates of 20% or higher to a new one that has 0% interest for 6 to 18 months. During this time, all the payments you make will go against your balance instead of just paying interest. This should help you pay down your balance and get out of debt quicker. However, before you sign up for one of these cards make sure you understand what the interest will be after your introductory period. Some cards will escalate to just 12.99%, while others might go to 18%.
A fourth alternative and one that has become very popular over the past few years is called debt settlement. Again, this may not sound like a debt consolidation loan but it really is. The way it works is that you hire a company such as National Debt Relief to negotiate with your creditors and settle your debts for you. We are usually able to save our customers thousands of dollars and help them become debt free in 24 to 48 months.
Stop feeling as if you’re adrift on a sea of debt. Call our toll-free number today or fill in the form you will find on this page for a free debt analysis and estimate.