Consolidating your Credit Card Debt

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Consolidating your Credit Card Debt

Wednesday, April 23rd, 2008 Subscribe To Our Feed

Credit card debt is a growing national problem. Companies are reporting that over 50 percent of credit card accounts are 90 days or more past due. Many Americans are finding they have overextended spending with credit cards and struggling to reduce the debt. Credit card consolidation programs provide a mean of resolving the debt in a more affordable manner.

With a credit consolidation program, the goal is to take all of your loans and to combine them into one monthly payment that you can pay off in just a few years (about 3-6 years in most cases). By consolidating your debt you can often qualify for a lower rate on the single loan because of the larger amount.

Before agreeing to consolidate, research options available to make sure the new loan will not cost much or more than the individual loan payments combined. There are non-reputable companies that try to avoid giving the best rates. Shop around before making a decision and avoid signing on the dotted line during an emotional moment. Calculate the current total monthly payments so they can easily be compared to the proposed consolidation amount. This will allow you to determine which offers the best option.

When you have a consolidation loan, it is very important that you make your monthly payments on schedule. Your payments will no longer be sent to your creditors. Instead, you pay the consolidation company who then in turn pays the creditors on your behalf.

Late payments will put consolidation loan status in jeopardy and creditors may resume collection activities. This can also result in an increase in the loan interest rate. Frequent communication with the assigned credit counselor (or “consolidation specialist”) is vital so that problems or changes can be addressed quickly. This will prevent the account from being returned to collections for payment.

Though your consolidation program is making your payments for you, it is still your responsibility to read the monthly statements from your creditors. Your interest rate should be reduced and you should no longer be accruing late fees. If either of these doesn’t look right or the consolidation company isn’t paying the right amount, contact your counselor to discuss the problem. company is paying your creditor the right amount.

Debt consolidation loan programs vary and picking the right one will depend on the individual situation. Some programs may have a higher monthly payment over a short period of time while others may offer lower payments spread over several years. Let common sense prevail. Look for the loan with a monthly payment that is affordable.

Some companies offer a fixed interest rate and disallow principal payments, which can reduce the loan more quickly. Look for a loan consolidation program that will allow you to pay more when you can!

Thinking about loan consolidation? Go and visit www.allaboutloanconsolidation.com and learn about Credit Card Counselling, unsecured loan consolidation and other related information.

Article written by Martin Tan

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