Credit card debt consolidation

Credit cards are a modern financial tool which can be used wisely or foolishly.
Contrary to popular belief, credit cards can actually be used to your benefit, but you must be aware of the potential risks and pitfalls involved and most of all, exactly which cards suit your lifestyle.

If you are already in debt, then getting another credit card may seem foolhardy. However when you take a closer look, it could be the answer to your prayers.

The idea of a credit card, at its simplest form, is to allow people to purchase items for which they do not have the cash for. In short, it fulfills impulse purchases. It is understandably extremely easy to run your credit card to its limit in a very short amount of time. Not until you see the bill do you begin to realize the trouble you may be in due to the high interest rates on most cards. That $2000 television can over time turn into a $6000 television.

Low interest credit cards for people in debt can be a good way to pay off the debt faster. It is possible, with some cards, to transfer multiple credit card balances to a new, lower interest card. If you have the aim of paying off your credit card fast, then you will be more concerned with the interest rate rather than any interest free purchase periods (because you don’t plan to make anymore purchases!).

Credit card debt consolidation can lower your monthly repayments and ideally, lessen the total amount you will pay until the balance reaches zero.

You will require a good credit history to be able to take out another credit card if you have existing credit debt. If you have a record of missed payments then banks will be hesitant to lend you more money (which is essentially what a credit card is doing).

When consolidating your debt to a low interest rate credit card, your total balance will not be lowered. You will still owe the same amount before consolidation. The aim is to pay less interest and pay off the debt as quick as possible.

Interest on credit cards is charged on the balance owing, not on the credit limit. Therefore the more you pay and the quicker you reduce the balance, the less interest you pay per month. This leads to lower monthly payments.

Low interest credit cards for debt consolidation are just one option you may consider taking to reduce your monthly repayments.

By: Ron Dayton

The majority of people have their first taste of debt from the use, or better said misuse of their credit cards. Since it is very easy to ‘charge’ the bill to the credit card, you would not be able to keep track or realize when the card reaches its maximum limit. You would think that as long as you pay the minimum it is okay – well think again.

The credit card charges a very high interest per month, that if computed annually would leave you speechless. By paying the minimum requirement every month, all you do is get into more debt, because the interest is calculated at compounded rate on the amount that is outstanding. After a while, you will find that though you have paid the capital amount twice over, you still have outstanding the same amount or more.

Slipping into debt is easy when you max your credit cards, in this manner – and after sometime, you would discover yourself in the position where the bulk of your pay packet goes to clear the bills of the credit card creditors. This is where the bill consolidation option comes in.

What is a bill consolidation program?

When you find yourself in a desperate situation with the payment of bills, the bill consolidation program offers you a loan that covers all your debts. Wow! Sounds great, doesn’t it? It is great when you are overburdened with loans and unable to cope with the financial stress. However, this solution comes with strings. You will need to hand over the control of your income and expenditure to the bill consolidation company.

That means that the bill consolidation company will receive your payment, deduct the minimum amount that is due to them first and only then permit you to use your money. In return, they would pay your credit card bills on time, negotiate (and often succeed) lowering the interest rates charged and get you exemption from late fees (if any). If you have been there, you would find this situation pretty good and acceptable.

In order to get the top treatment and benefits, you will need to shop around for the best rates. Each bill consolidation company imposes some fees for this service; the loan offered to you would usually have a lower interest than the combined interest rate you would be paying before you consolidate. Some companies charge very large fees, while some are quite reasonable. Ensure that you know all the details before you sign up with one.

Ensure that you know what other companies offer as both discounts and benefits and do not be afraid to negotiate for the best possible package. After all, you are there because you do not have enough money anymore!

Lastly, beware of the danger of slipping back into old habits of splurging. It is of no use consolidating old debts, if you go ahead and make new ones before (or even after) you settle the first ones. You will need to learn from this experience and maintain a basic financial discipline so the situation would not be repeated.

By: Robin Boddy

The economic times are trying, with may of us being further in debt than we can conceivably pay on our current salary. There are multiple ways available to us to get out of debt and find some relief from the many calls and demands for payment that we receive.

Depending on the level of debt, the level of income, and what you can conceivably afford to pay, you must select the best option for you based on the best method for your situation.

Among the many other options that you might have are these two, each of which has merits and drawbacks.

* Chapter 13 Bankruptcy: Very much a last resort, the Chapter 13 permits you to get out of debt completely and leave all of your bills behind, beginning with a completely clean slate.

The Up Side Chapter 13 will permit you to have no debts left when you are finished and you will begin owing nothing at all.

The down side: when you are granted bankruptcy the filing is immediately recorded on your credit rating. Depending on where you like, that reversal of your debt can stay on your credit rating for 7-10 years, preventing you from getting a job, from taking a home loan, an auto loan, or even getting a home or apartment to rent. In addition, your property may be sold in some cases to help satisfy your debts. While your home is usually excluded, other personal property may be subject to being taken by the courts.

* Credit Card Consolidation: when you use this option you are required to pay at least part of your debt. A company negotiates for you to gain you a lower pay off rate that may be between 40 and 70 percent of your current debt. The interest rates are also negotiated. You are then given a loan to pay them all off and have just one payment to pay to settle the debt.

The Up Side-Your credit card debt is forgiven to a certain extent, leaving you with less to pay. You can pay off your debts in a far faster time span.

The Down Side-You will take some hits on your credit. They will last possibly several months to a year.

When faced with difficult choices to get your debts under control, you are probably best served to use other solutions first and use bankruptcy as a very last resort when or if you are unable to find any other way to relieve your debt and get your financial situation back on track.

By: Hector Milla