Credit card debt consolidation could be the answer to your credit card debt problems. There are lenders that can help your debt through consolidation loans. Alternatively, if you are deep in debt, the best help you can get is with a company who specializes in debt consolidation.
You might experience one or more of these situations: a job loss, a serious illness, a death of income-earner, or bad spending habits. No matter what the cause of your credit card debt problems learn whether debt consolidation is the best solution for your financial situation.
Types of Credit Card Debt Consolidation Help
There are two major types of credit card consolidation. The first one is through a consolidation program provided by a debt consolidation company.
These type of services will negotiate with your creditors to lower your monthly payments. Then they will shop around for a debt consolidation loan to help consolidate all your monthly payments into one single payment and disperse this to the creditors on your behalf until you are debt-free.
Another type is through secured consolidation loan such as home equity loan or home equity line of credit. This is done by exchanging an unsecured credit card debt for a secured debt, backed by specific assets such as your home.
Credit Card Debt Consolidation Services
The help you can get through debt consolidation services for your credit card debt as well as other unsecured debt are invaluable because these debt consolidation agencies have special training as well as good contact with wide range of creditors.
With these contacts, they can negotiate with your credit card companies to lower your monthly payments. The companies agree to a lower payoff amount as they know you will be getting a debt consolidation loan and they will be receiving their money.
Secured Credit Card Debt Consolidation Loan
You can find many lenders that offer a secured consolidation loan. Here are some factors to look for when you plan to consolidate credit card debt with a secured or equity loan:
- Interest rate: You must try to relax the interest rate for debt consolidation to the maximum extent possible. The reduction in interest rates translates into a lot of savings during the tenure of the loan. But, the interest is linked to your personal credit rating. The higher your credit scores the lower the interest rates.
- Tenure of the loan: The length of the payment has direct correlation with the amount you will pay on your loan. Do not to get carried away by the low installment alone. Make sure the tenure of the loan will not create the entire program too expensive in the long run.
- Installment amount: Almost without exception, any loans you take out will be secured against your home. It means that any default can possibly repossess your home. Commit to the plan only if the installment amount is manageable. If it is not so, you must not commit, no matter how favorable the terms of the deal may be.
Pick Your Debt Consolidation Option
No matter what debt consolidation option you choose you will want to make sure that you are dealing with a reputable company.
They should tell you upfront about what they will be able to do for you, their fees and how to pay those fees. A good debt consolidation company will also clearly state the rights that you have when you are working with them and offer you a way to quit from the program if you’re unsatisfied with their services.
Another sign of a legitimate debt consolidation company is they can help keep you out of debt. Once you are making regular monthly payments, they will give counseling services that you can use in the future.
Overall, both credit card debt consolidation options could be the answer to the symptoms of your debt problems. However, they usually do not solve the cause of your debt load. To get out of debt and stay out of debt you will still need to improve the way you manage your money.