How Debt Consolidation Can Work to Your Advantage

Today, let’s consider how debt consolidation can help cash-strapped consumers, like you, win their battles against credit card debt.

2 Forms of Debt Consolidation

Before tackling the beneficial features of debt consolidation, let’s talk first about the two popular forms of this credit-busting method that you can sign up for to gradually pay off your credit card debt.

The first involves zero- or low-interest balance transfer credit cards. In this type of consolidation, you will be advised to transfer and merge your outstanding balance from all your credit card accounts to a card program that carries a reasonable annual percentage rate, or APR. This way, you can significantly reduce the payments you will submit on interest. And with this charge out of the picture, for sure, it will be much easier for you to keep up with your monthly payments until you can completely settle your credit card charges. Yes, it’s as simple as that!

The second type of consolidation entails signing up for a debt consolidation loan. With this loan, you can look forward to receiving a huge sum of cash you can use for settling your credit card debt, in full. In return, the lender will oblige you to repay the funds you received, on a monthly basis, within a span of two to five years. And, although this credit program comes with interest, you’ll be glad to know that the rate of interest imposed on most debt consolidation loans are much lower than what was previously-imposed in your other credit card accounts.

Now, how can you benefit from signing up for debt consolidation programs? Let’s find out.

Beneficial Features of Debt Consolidation

• Less interest charges. If you’re currently managing several credit cards, which carry widely-varying rates of interest and transaction charges, for sure, you end up making substantial payments to your card issuers, each month. This is especially true for consumers who decide to carry balance from one month to the next.

However, if you will decide to transfer balance to a low-interest credit card then, you can absolutely reduce the payments you make on interest. That’s because, instead of paying several rates of interest, there will just be one rate of interest that you have to worry about. Furthermore, you’ll be glad to know that the APR on your new account will be much lower than what were once-imposed on your old credit cards.

And, as was mentioned above, debt consolidation loans also carry low rates of interest and fees – a perfect combination for consumers with limited budgets.

• Better and more flexible payment terms available. By signing up for debt consolidation, you can actually request for a complete restructure of your loan or credit card payment plan. After all, the credit agency will work with your creditors to come up with better payment arrangements that will most definitely work to your advantage. That way, you can gradually pay off your dues, without compromising the cash you have initially set aside for your personal or household expenses.

So, what are you still waiting for? Scout for credit agencies that can provide you with affordable debt consolidation programs, and sign up for one, immediately!