Credit Card Consolidation Help

Borrowers are often enticed by the attractive features of debt consolidation, such as lower monthly payments and fewer bills. While consolidation loans can help you effectively manage your credit card debt, they do not relieve you of the long-term pressure to repay the loan and can lead to even more problems if you never learned to responsibly repay your debts.

Consolidation

Credit card consolidation is useful to some borrowers. However, consolidation programs do not eliminate your debt, but merely shuffle it around to new lenders. Consolidation loans last longer than regular credit card payments and cost you more money over the life of the loan. Anyone considering this kind of loan should always consider how much money you will have to pay in the long term versus how much you can save in the short term.

Balance Transfers

Credit card debt consolidation comes in different forms, each of which has its own positives and negatives. One of the simplest forms of credit card debt consolidation is the balance transfer, in which you take the debts from two or more credit cards and transfer them to another credit card. Credit card balance transfer offers typically come with low introductory interest rates but can also charge a percentage of the debt transferred as a transfer fee.

Consolidation Loan

Another way to consolidate credit card debts is to get a consolidation loan, either in the form of a personal loan, home equity loan or similar instrument. These loans typically come with lower yearly interest rates than credit card balance transfer offers, though they usually do not offer the low introductory rates of balance transfers. Also, home equity loans typically require you to grant a security interest in your home which can eventually result in a lien or a foreclosure, whereas balance transfer offers do not require such an interest.

Credit Counseling

Whenever you need help dealing with your debts or are considering a debt consolidation loan, it is usually beneficial to consult with a professional credit counseling organization that can help you evaluate your options. Be sure to double-check the credentials of any organization offering credit counseling services as some of these companies are scams or offer dubious assistance.