Learn how to get your financial home in order with a credit card consolidation loan. In the United States, the total credit card debt is around $ 800 billion. That’s a lot of MasterCard and Visa debts owed to your friends and neighbors. The average interest rate for a card is also over 13 percent and rising. Thanks to the new bankruptcy law, banks can now demand interest rates of 25 percent, 30 percent and more. A consolidation loan offers many advantages.
Avoid defaults and bankruptcies by taking positive action now. Balance transfers are handy, but not a long-term solution. One way debt consolidation for homeowners is to refinance mortgages.
Benefits of a credit card consolidation
If you are a homeowner and choose a secured loan, your interest rates are generally lower.
Since credit card debt consolidation loans often have lower interest rates, your monthly payments may also be lower. You also only have to make one payment to a single creditor. Keep in mind that the term of your loan is often longer, although your monthly payment may be lower.
Balance transfers are not the same as debt consolidation
Balance transfers are not a permanent solution. Sometimes a lower APR is just a temporary introductory rate. Often, credit transfers charge fees that are either a percentage of the amount transferred or a certain fee in US dollars. Balance transfers are easy and convenient, but you only have to move your credit card debt. You still have to pay late fees, high interest rates and overrun fees when you top up the balance on your new card.
Homeowners have additional options for loans
If you’re a homeowner, one option is to refinance your first or second mortgage and use the extra cash to repay your higher-interest credit card deposits. A first mortgage is typically refinanced at a lower interest rate than a second mortgage, which is usually a home equity line of credit (HELOC) or a home equity loan. An important fact is that this converts your unsecured credit card debt into secured debt. This allows a lower interest rate, which comes at a price. In most cases, you will secure the new secured debt at your place of residence.
Finding a card debt consolidation loan
A great way to find a credit card consolidation is to search online. Simply enter “Credit Card Debt Consolidation Loan” into Google or your preferred search engine. For many consolidation loan providers, you can request faster approval online. If you are a homeowner looking for mortgage refinancing, you can consider one of the major brokers or contact your local mortgage broker. Also, contact friends or family for a referral. You may have already done the research for you.
With a good or bad credit, a consolidation loan is not without risks
The conclusion of a credit card consolidation loan is not without its risks. Examine a debt consolidation company before signing anything. Beware of additional or hidden fees. Check with your local lender for the Better Business Bureau. A good credit score usually means that you can qualify for the best available interest rates. Even if you have less than perfect or even bad credit, there may still be credit card debt consolidation loan options for you.
If you have trouble getting credit card credit after consolidation, you may need to consider other options. An appropriate first step could be working with a debt counselor and setting up a debt management program. Credit counseling is also offered by several agencies and is another way to consolidate debt that you should consider.
Ultimately, you have to change your spending habits. If you take out a loan and then have a high credit balance on your credit cards, you are in a worse financial position than at the beginning. Think about your financial goals and disciplinary level, and then decide if a credit card debt consolidation loan is right for you.