If you’re a debtor who has recently incurred a huge amount of debt on your multiple credit cards, you must be worried about the ways in which you can eliminate the entire debt burden and lead a debt free life. Among all the debt relief options, the one that benefits most debtors is credit card debt consolidation.
As you can repay your debt burden and also boost your credit score, this is most often the recommended option by the advisers to the debtors. Are you aware of all the benefits of credit card consolidation and about the ways in which you can consolidate your debts? If answered no, here’s help for you.
You can take out a debt consolidation loan: This is a DIY process of getting out of debt and you have to take out a debt consolidation loan from a bank or any financial institution. This loan will carry lower interest rate and you can use the proceeds of this loan to repay the older accounts. Once you repay all the old accounts, you can easily start repaying the new loan with small and affordable interest rates. The biggest benefit of consolidating through such a loan is that you’ll no longer require making more than one monthly payment in a month and this way you can save a considerable amount of money.
You can tap the equity accumulated in your home: If you own a home and you’ve accumulated enough equity in your home, you can even take out a secured debt consolidation loan in the form of a home equity loan. This will carry drastically lower interest rates as you’ll place your home as collateral to the loan. However, since your home will be used as collateral, you have to ensure that you make timely payments on the loan so that you don’t risk losing your home to a forced foreclosure.
Get enrolled with a debt consolidation program: Another way in which you can consolidate your credit card debts is through a debt consolidation program. Your debt consultant will negotiate with your creditors and ask them to lower the interest rates on the accounts so that repayment becomes easier for you. Once they agree, you just have to make a single monthly payment to the company and this will be disbursed off to your creditors in due time. Here again, you can make single outgoing monthly payments.
Credit card debt consolidation actually means combining your debts into a single monthly payment. You have to choose which option suits your needs and budget so that you don’t default on the payments after taking the decision of consolidating. Missing payments on your consolidation loan may negate the entire offer.
Definitely,we find a number of positive aspects of credit card debt consolidation including lowering the burden of huge loans. However, a borrower should put importance on the management of the things involved with consolidation.