Consolidating Your Credit Card Debts

Pros and Cons of Consolidating Your Credit Card Debts

Debt consolidation is a process of turning debt into one low monthly payment. This is a highly beneficial technique for people who have lots of debt, but are unable to pay off all their outstanding debts as they are just not able to make ends meet.

Several ways to consolidate debt

Several ways to consolidate debt

It can be done through debt settlement, debt consolidation loan or a debt consolidation company. Each has its own advantages and disadvantages.

Debt settlement is the process of negotiating with your creditors for a lower amount to be paid back. Your creditors will accept a lower amount if you can prove that you can’t pay it back. In this case, your creditors may agree to lower your debt by reducing it to a level that is less than your total outstanding balance. After this, you make a single monthly payment to the debt consolidation company.

If you want to consolidate debt yourself, you can apply for a debt consolidation loan. This is a loan that you can use to cover your monthly debt payments. If you need to apply for a debt consolidation loan, get a consolidation loan quote from a few different lenders to find the one that best suits your needs.

Consolidate debt by using a debt consolidation company

Consolidate debt by using a debt consolidation company

The debt company will be in charge of handling all your accounts. They will negotiate with your creditors and send your payments to the debt consolidation company.

Once your payments are sent to the debt consolidation company, the debt company pays your creditors and if all goes well, you will be debt free. If there are still any outstanding balances left after paying the debt consolidation company, you must pay these balances on your own.

You will have to pay interest on the debt consolidation company’s fees. That is why it is essential to go through debt consolidation companies carefully to avoid the pitfalls that can happen when taking the first company that offers you a low price for a high price.

Don’t forget that you should consult with a lawyer before you decide to use a debt consolidation firm. They will be in charge of finding you the best company that can handle your needs.

Choose the right debt consolidation agency

Choose the right debt consolidation agency

Before you choose the right debt consolidation agency, do some research. There are many companies out there that promise you everything but deliver nothing. Before you give in to these companies, you need to know that there are many reputable debt management companies out there.

Get at least 3 free quotes. Call as many of them as you can. You should not settle for the first offer you receive.

The main purpose of a debt consolidation agency is to negotiate your credit card debt so that you can become debt free. If you plan to use a debt consolidation company to pay off your debts on your own, you should first go through a debt management program and seek counseling. After you have cleared up your debt and put an end to your financial worries, do not forget to follow up with your counselor to keep track of your progress.

If you feel that your credit card debts are too large and unmanageable, then you should contact a debt management company and inquire about their services. You can also learn more by visiting the links below.

6 fundamental tips to pay off credit card debt

The credit card is a hand in the wheel when making payments, combining practicality with some advantages, such as the possibility of splitting amounts, for example. However, you need to be careful and use the card sparingly so you don’t end up in debt.

It is not uncommon to meet people who end up getting tangled up with credit card debt and committing themselves to expenses that they cannot afford, and that seems to have no end. To avoid this situation or solve the problem, check out our tips today:


Learn how to use the card

credit cards

When using the card, always keep in mind the percentage of your budget that you can commit to that expense and what is the amount to be paid in that month, in full. Making only minimum payments is the first step towards building a debt that can seem priceless in a short time!

If possible, always keep a record of the expenses of the card for your own control, establishing and respecting a monthly limit for its use. It is not because the card offers a limit of 3 thousand dollars that you need to spend all this amount, especially if your budget does not include such debt.


Review your spending

Negotiate debt

Once in debt, try to cut superfluous or not-so-essential expenses from your monthly budget to save enough to pay off your debt. Card interest is usually calculated at very high rates and is levied on themselves, which leads to the famous snowball.

Despite prescribing in 5 years, the idea is that the client does not wait for the time to pass and settle his debt with the card as soon as possible, avoiding possible constraints and lawsuits. Making a temporary sacrifice may be enough to get the accounts back in order.


Negotiate debt

If expenditure restraint was not enough, it may be interesting to negotiate the debt. A good alternative is to try to divide the debt into fixed installments that fit your budget. Always keep in mind that negotiation is an exchange of proposals and that you are not obliged to accept the first one that you are offered. Always look for the best conditions so that you can pay off your debt.


In case of varied debts, observe the interest

credit debt

If you have debts on more than one credit card, note the interest rates charged on each one. We are often led to think that the settlement of the lower-value debt should be the priority, as that would end that issue, leaving it focused only on the larger debt. However, the focus should always be to pay off the debt that charges the highest interest rate first, as it is precisely this rate that makes the total debt grow.

Even consider looking for a personal loan with better terms, lower interest rates. This is the case of Lite Lending, for example, one of the partner institutions of Good Lenders Credit that you find within the application.


Don’t use one card to pay another’s debt

credit loans

When using a credit card to pay another one, you are only changing the debt of hands, but staying within the interest charged by administrators and which are usually calculated based on the highest rates in the market.


Exchange the debt for a smaller one

If you plan to choose to take out a new debt to pay off your card debt, keep in mind that you need to make an exchange that is advantageous in terms of interest. Look for loans in the market that cover rates lower than what you have already paid and request the amount needed to pay off all debt with the card. You will continue to owe the same amount, but with lower rates, which may facilitate your payment.

A very useful credit tool, the card becomes the villain of many households by giving rise to astronomical debts. Following our tips, you will be able to resolve your credit card debt as soon as possible and get your financial life up to date! Have you had problems with your credit card? How did you solve the situation? Comment and share your experiences with us!