A Closer Look at Credit Card Consolidation

Credit card debt is not rare problem.  Every year, thousands of consumers struggle with bad credit because of poor management of their credit cards.  When stuck in credit card debt, is there an easy way out?  In this post, let’s talk about two debt consolidation options that can be applied on credit card debt.

Credit Card Debt Consolidation Loan

The first debt consolidation option is by acquiring a loan from a bank, a private lending firm, or credit union.  The amount borrowed will be used to pay all existing charges a cardholder has with different credit card companies.

By paying off credit card debt with a loan, continuous accumulation of debt can be avoided due to the high interest rates and penalty fees imposed by each credit card issuer.  Debt repayment also becomes easier since the borrower only has to deal with one lender, submit only one payment each month, and enjoy a lower rate of interest.

Nevertheless, it’s important to understand that debt consolidation loans usually require the submission of collateral.  IF you have a large amount of credit card charges, you may need to submit collateral with a higher value such as a home or vehicle.

[Article: Credit Card Consolidation Tips for Consumers]

After consolidating, bear in mind that you have a responsibility to submit your payments on time since defaulting on your debts would mean losing the property to your lender.  Taking the consequences into account, consolidating unsecured debts (like credit card debt) with a secured loan is a serious matter.

Balance Transfer Credit Card

Another way to consolidate credit card is by acquiring a zero balance transfer rate credit card.  By transferring your charges to a credit card with 0% APR, debt repayment can be much easier.  Are there consequences you need to know?

First, remember that the 0% APR offer is not a permanent deal.  It is just a promotional rate.  Under the new credit card law, credit card issuers must offer a minimum promotional period of 6 months, and no less than that time frame.  After the introductory rate, the regular APR will apply.  See to it that you are aware of what the regular APR would be when the introductory period ends.

Furthermore, transferring all your balances to one balance transfer card can max out your credit limit.  Doing so can hurt your credit rating.  Hence, before transferring balances, carefully weigh which of your credit cards have the highest interest rates and which ones can be paid off without making the transfer.

More Tips on Credit Card Consolidation

Whichever debt consolidation method you choose to recover from credit card debt, be sure to keep your spending in check.  Avoid charging new purchases to your credit cards especially while you are still working on repayment.

Before consolidating, order a copy of your credit report to make sure that there are no unauthorized charges or illegal transactions made in any of your accounts.  If you discover errors, send a dispute letter right away to the bureau that issued your report.  Contact the credit card company involved and inform them about the matter.

[Article:  Tips On Consolidating Credit Card Debt]

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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NHBS Inc © 2022

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

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