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Understanding Debt Management Services

When some people become overwhelmed with debt and find it hard to pay their bills, they often turn to a debt management service. These services can often be found through credit counselors, and you should only use a service that you’re comfortable with. This service should be more concerned with helping you than with making a profit.

What Do Debt Management Services Do?

The debt management service transfers payments from their clients to the creditors. In return, they may take out a commission from the transfer or will receive fees from the lenders. While debt management services may work with a wide variety of different loans, they usually focus on debt that is unsecured. They are different from credit counseling services. Those with auto loans or mortgages are usually not referred to debt management companies.

Consolidation of Your Debts

Many debt management services offer debt consolidation loans. All of your bills and outstanding debts are combined into one bill. Once this has been done, it is up to the debtor to make the monthly payments on the loan. If the debt management service reduces the interest or balances on your loans, this can effect your credit. Many lenders will view you as being a high risk client when looking at extending future credit. Despite this, the effect on your credit is less than things such as continuous late payments. A debt management service is also an excellent alternative to filing for bankruptcy.

What’s In It For Them?

It is common for debt management companies to earn up to 10% of the money transferred from their clients to the creditors. This along with the fees paid to the debt management companies from the creditor can lead to very large profits. As can be expected, some companies will try to abuse their power by persuading clients to sign up for a service which is driven by profits instead of helping them manage their debts.

Save Some Pennies For Those Rainy Days

Because many people find it hard to adapt to a debt management service, emergencies may come up where money is needed. It is important to find out what will happen if you miss payments before you commit to using the service. Each company is different, and some companies may have large penalty fees for customers who don’t make their payments on time. With the rise of debt management services, people have often been advised to look for institutions that are non-profit. The idea was that organizations for profit would focus more on profits than with helping clients manage their debts.

Profit or Non Profit?

Despite this, many debt management services that are for profit will advertise themselves as being non-profit. Using a non-profit organization doesn’t guarantee you will get better service than you would from a for profit organization. It is best to use services that are accredited with the National Foundation for Credit Counseling. Accredited services are not likely to charge outrageous fees or attempt to take advantage of their clients. Before you look at a debt management service, you should call your creditors to see if they can lower your interest rate.

Getting a Cheaper Rate

Many credit card companies will lower your interest if you call them and inquire about it. It may also be possible to use a standard lender as opposed to a debt management service. Under some circumstances it may be necessary to file for bankruptcy. You could also get an unsecured loan to pay off all your debts if your credit is good.

You should also be wary of debt management services which are late making your payments. If this occurs you should immediately call them and get an explanation. Your credit can be damaged if they make your payments late, and if they are charging you high fees you should cancel their service and look at other options.

Joseph Kenny writes for the Personal Loans Store and offer more information on debt consolidation loans and other loan topics available on site.
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Debt Consolidation in the Perspective of Debt Negotiation

Debt consolidation versus debt negotiation are two options that are available to you if you need debt assistance. When your monthly bills become too much for you to handle, it makes sense to use debt consolidation or debt negotiation for solving debt and credit problems.

Debt Consolidation

Debt consolidation services have prearranged debt repayment plans with most credit card and collection companies. When you sign up with a debt consolidation company you are offered a lower overall monthly payment based on a lower interest rate they have arranged with the creditor.

This payment is lower than what the credit card companies offer you, saves you money every month and is often the best way to consolidate debt.
One benefit of a debt consolidation repayment plan is it will stop you from getting harassed by your creditors as long as you make the new, lower monthly payments.

The downside of the debt consolidation repayment plan is that you have to cancel all credit cards that you include in the plan. You are also charged your first payment you make toward the program and an additional monthly administration fee. This administration fee ranges from flat fees of $10-$50, while others charge a $5 fee for each creditor. That means you’ll pay about $30 a month that doesn’t go to paying off your debts.

The debt consolidation program benefits you if you have high interest rates or have higher credit card bills than you can manage. Some people like to make only one payment to one company for all of their debts.

Debt Negotiation

Is sometimes referred to as debt settlement. This is most often offered to people who can’t handle a debt consolidation program. If you can’t make the minimum payments of a repayment plan or haven’t made payments in the past 3 months, a debt negotiation program is the next step for solving debt and credit problems.

One benefit of a this program is you stop making payments to your creditors. The debt negotiation company either takes monthly payments from you and keeps it in an account, or lets you keep the money in your own account.

While you are making these monthly payments to the debt negotiation company, they negotiate with your creditors for a lower payoff of around 40-50% of your total amount of debt. Once the negotiated settlement is agreed upon with your creditors, the debt negotiation company makes a one time payment to them.

A downside of this program is, it lowers your credit score for as long as you are in the program. However, most debt negotiation companies require the creditor make the credit report show paid in full so it doesn’t show up as a negative on your report once your account is settled.

Some debt negotiation companies include a credit repair service that will remove the negative items caused by the debt negotiation program. You pay for this service as part of their program.

Now that you have an idea what debt consolidation versus debt negotiation is choose which one will work best for solving debt and credit problems for you.

What Is The Better Option: Consolidation Or Negotiation Of Debt

Today, unfortunately, many people find themselves under debt and are struggling to find a way out of their situations. There is no shortage of plans and schemes out there offering a way out of debt. At this time, it should suffice to deal with two major approaches to solving your debt problems and alleviating your financial woes. The first one is debt consolidation while the second is called debt negotiation. Either may prove to be an effective means to remove the weight of your debt load.
Debt Consolidation
If you are considering debt consolidation, you have a few options available to you. Many credit card companies and creditors offer customizable debt repayment plans can consolidate all of the debt and put it under a single payment that has a lower interest rate. There are also debt consolidation companies that specialize in the area of debt assistance. If you apply with one of these services, all or most of your outstanding debts are consolidated into a single monthly payment. This payment is typically lower per month and is offered at a lower interest rate than most creditors will allow.
Since this payment will be at a better rate and cost than you would have paid to credit card companies, you will likely save money each month, which can then be applied to future payments to pay the debt off faster. The big plus that most people attach to debt consolidation plans is that you will be able to silence the voices of multiple creditors as long as you consistently pay the new arranged payment amount with the consolidation company or other provider.
One of the cons of using debt consolidation is that you will be required to cancel all of your current credit cards that are represented in the consolidation plan. There are also fees associated with the plan, such as administration fees, that will affect the amount going towards the actual payment of your debt. Many fees are set at flat rates or set rates for each representative creditor. Bear all of these factors in mind.
Debt Negotiation
Another term for debt negotiation is debt settlement. This is an option that is often related to debt consolidation because most of those who choose to negotiate or settle their debts have shown that they are unable to keep up with the monthly payment associated with a consolidation plan. The person who believes they will not be able to pay that minimum amount, may want to look into debt settlement options to reduce credit and debt issues.
It is an attractive option for many people who have serious debt loads because they can essentially stop paying their creditors if they’ve enrolled with a debt negotiate company. These companies represent the client and work to negotiate a settlement price to wipe out the debt with the creditor. Any payments you make to the debt negotiation company are saved in an account for future use to pay off the negotiated settlement. This is usually a one-time payment that clears the client’s debt load.
One notable drawback with these types of services is that your credit score is often lowered by association with the company for the duration of the relationship. Of course, to offset this, most of the settlement companies will have the creditors gather a new credit report that that notes the total payoff of debt. Furthermore, any other negative effects on your credit can be fixed by credit repair services many of which are offered by the debt negotiation companies.

Peter Kenny is a writer for The Thrifty Scot, please visit us at Debt Consolidation and Bad Credit Remortgage
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Christians Debt Solutions Can Change Your Life

Christian debt solutions can help a Christian to avoid bankruptcy through negotiations and consolidation of financial obligations. Some of the services they offer can teach you to learn to live within a budget. In cooperation with creditors you can work to lower interest rates and reduce the principle. The work of credit recovery involves the consolidation of invoices, and learning what the word of God says regarding debt- “No one should have nothing but love for a debtor,for who loves another has fulfilled the law”(Romans 13:8).
Negotiation of cash below a balance includes less interest. Consolidation can lead to a lowering of interest rates and a monthly payment of lessl instead. Credit Repair can help to improve your credit ratings, so that lenders offer lower interest rates and interest. A Christian debt repayment plan can help their finances in accordance with the churches teachings.
Consumers who are in financial difficulties need to pray and ask God to help them successfully manage the debts and to avoid future debt once all their bills are paid. You should consider a solution of the debt as a Christian solution to financial problems. In today’s world there are several options for those who need help. There are many companies including Christian Debt Solutions. The children of God often seek help from the companies listed on the word of God, the ethics and are honest and trustworthy. Those who pray for you are the kind of friends who to go ask for help.
Unexpected help sometimes occurs when life places the children of God in situations that are undesirable and stressful. Society encourages consumers to spend. Poor money management overruns good intentions. To many, the credit card offers great value and convenience. Most consumers apply for credit cards and find debt in a few months, which was created by a person that was employed and a good consumer. Once interest rates begin to climb and they become unemployed then is almost impossible to pay the bills. Other things that can contribute to the financial downfall can be higher house and car payments, fuel and the increase inliving costs and try to pay phone bills, cable bills, utilities. A Christian debt solution can be a good starting point for the search for answers on how to deal with creditors and reduce debt related stress.
One of the first things that most people think when they have financial difficulties is they don’t want to be left in bankruptcy. Chapter seven bankruptcy allows a person to cancel their debts including interest. Before a consumer can declare bankruptcy, he or she has to attend a class of consumer credit in a certified course. A certificate on completion of the class must be brought before the court. Bankruptcy can be very expensive, a lawyer must be retained and legal expenses must be paid. After the failure may be on the debtor of the credit report. This will be remembered as a public register of seven to ten years. A Christian debt solution can offer consumers a range of options for dealing with financial problems, so that he or she is not required to file for bankruptcy.
The Regulation and negotiating skills are necessary for dealing with financial obligations. Companies such as christian debt consolidators offer these services. Some creditors go to work much earlier to solve some of the problems to help the debtor avoid filing for bankruptcy. Companies will work in close collaboration with many creditors to negotiate a settlement for less than what is actually owed. In addition, the lender agrees to put an end to all fees and interest. Settlementscan be anywhere from 40% to 75% of what is actually owed. If the customer can furnish a lump sum to be paid immediately in an agreement to accept a lesser amount. It may include the negotiation of an agreement, in which the debtor pays monthly until the debt is completely paid in full. The important thing to remember is that this type of agreement requires that the customer must be ready to ensure that the payments are made on time or creditors may not honor the agreement.
Learning to live by a budget is essential to overcome the problems caused by poor management of money. A Christian debt solution employs professionals who understand how to create a budget for the customer, so that he or she will change their buying habits. The customer must be ready to write all the expenses and track every cent and budget all revenue and total debt. If the person has less than is in the budget he or she must do without in order to save elsewhere. Spending too much on food means less money for other things like entertainment.
Consolidation of debt is another service, which can help consumers pay for the purchase of a loan. Saving for a monthly payment and no more. We hope that the interest on the loan will be much lower while the debts are being paid off. When the monthly payment is significantly less, it is easier to manage getting the total debt paid off. You could apply for a second mortgage if there is enough equity, or you can use a credit line to pay the bills. Real estate property loans tend to have lower interest rates compared to personal loans. Christian debt consumer solutions provide valuable information to make the best decision and may provide the maximum benefit in the long run.

Debt Consolidation Loan: What is this Program?

A debt consolidation loan program combines traditional debt negotiation with a debt consolidation loan so the borrower can get a reduction on his debt via negotiation while at the same time getting lower rates and a single and lower monthly installment with a repayment schedule suit for his budget.

Debt Negotiation

When you fail to repay a loan, the minimum payments on your credit cards or even regular bills, you usually incur in penalty fees and extra interest rates that contribute to a continued growth of your debt. Creditors tend to increase the amount that is owed to them by these means because they have additional costs when you fail to repay but also because they know that eventually they may be forced to resign a portion of the money, thus by increasing your debt they make sure to get as much as possible.
However, since this is a common practice among lenders, borrowers can easily fall into a debt trap with all those penalty fees and abusive interest rates. Debt consolidation agencies provide expert negotiators that know exactly how to deal with creditors and can agree with them a solution to your debt problems. If you have to file for bankruptcy, then they won’t be able to recover but a small portion of their money, so they are more than willing to show flexibility when a negotiator gets in touch with them.

Agreements can reduce your debt by up to a 60%. The main reduction is obtained by eliminating the interests charged over the debt’s principal and the capitalization of interests. Sometimes you can even get a reduction on the principal itself. And though it is not a reduction, you can get an ease on your debt by rescheduling the loan payments into longer repayment plans.

Debt Consolidation Loans after Negotiation
Once a reduction on your debt is achieved you can get even better terms by applying for a debt consolidation loan. The money you get from the loan will be used to cancel outstanding debt so you’ll end up with a single and lower monthly payment. By doing so your debt won’t be a huge burden anymore and you will afford the installments without making sacrifices. There is however, a limitation that you should be aware of.

Secured and Unsecured Loans

Unsecured Consolidation Loans cannot be used to consolidate secured debt. If you have different kind of debt you must resort to either a unique secured consolidation loan to cancel all your debt or an unsecured consolidation loan to consolidate unsecured debt and a refinance loan in order to consolidate secured debt like mortgage loans and home equity loans.

Advice for Deciding When to Consolidate Student Debt

When consolidating student debt, the loans principal won’t be modified. Nevertheless, you’ll be able to save thousands of dollars on interests and reduce your monthly payments by extending the loans length. Moreover, consolidating at a fixed interest rate will let you keep the same monthly installment amount through the whole life of the consolidation loan.

That being said, consolidating student debt is not always worth the trouble. Only if you can obtain a substantial reduction on your debt or if you can make your monthly payments more affordable you can say that consolidating student loans is appealing enough. In order to determine this you may want to follow the following tips:

Consolidating during the grace period

Be especially careful not to consolidate during the initial grace period unless the consolidation loan includes another grace period or you can do without it, because otherwise you will have to start paying your debt right away. Grace periods usually last between 4 months and a year. During this period, the borrower is not required to start paying off the loan. The main reason for this benefit is that the graduated student might need such a time to find a job and get used to a new lifestyle.

Interest Rates

If you can get a lower interest rate than the average of all your outstanding loans, that would be great. However, you’ll probably get an interest rate just a bit higher than the average interest rate of all your student loans. The reason why you would want to consider consolidating even with a higher interest rate is that the length of your loan will be extended and the loan installments reduced. Besides, the interest rate will be locked so if market conditions worsen you would still be paying the same amount, as opposed to federal student loans which rates

fluctuate with the market.

Contact government agency for cancellation
Prior to consolidating your federal student loans or other government loan, you might want to contact the government agency that issued the loan. It is possible to fully cancel the loan without reimbursing the money if certain requirements are met. Since you have nothing to loose, before searching for a lender to consolidate your student debt, make sure you can’t get the government to condone the whole or part of the debt. After consolidating, you won’t be able to apply for this kind of government forgiveness.

Set aside special loan programs

There are certain loans that you might want to maintain with its original terms. There are loans where the government pays for the interest and you only pay for the principal, others where the loan can be renewed upon cancellation or even before. If you consolidate this kind of loans with the rest of them you’ll loose this special attributes. So make sure you won’t have use for them before rushing in. There is always time for consolidating, so you might as well make a conscious decision on this matter.

How To Get Out Of Debt

Every year consumer debt in the UK increases and so more and more people are asking themselves the question how do I get out of debt?. At this point it may seem like an impossibility which is why this article provides some very sensible guidance to help you get your-self out of debt and the financial nightmare that you are presently in.

Currently interest rates are low due to the low state of the bank of England base rate. This has encouraged people to take on more and more credit in the belief that these debts are affordable. What this actually means is that at present even those people that think they can afford the repayments of credit may begin to struggle should interest rates begin to rise which is what they are predicted to do shortly according to leading experts in this field. If however, you are already struggling with your debts the situation is only likely to get worse.

Today is the time to begin to think about how you are going to get out of debt and build an action plan to reach your goal of making yourself ‘debt free’.
Congratulations! The very fact that you are reading this article means that you have made the first step to facing the problem and getting rid of your debt. Make no mistake your credit is your debt. You should begin to call it this as this will help you to realise your situation.

How bad is your debt situation?
The next step is to build a table of your current financial situation. List on the left hand side all your monthly incomings including your wages (after deductions like tax and national insurance), benefits, rent and any other income you have. Next on the right hand side list all your monthly outgoings apart from your debts. This should include your mortgage, rent, bills, food expenses, car or travel expenses, insurance, childcare and any other outgoings that you have. Now deduct your total outgoings from your total incomings and the figure that you have is your ‘maximum disposable income’ (MDI). Next write down all your debts and your monthly repayments. This may be scary but the sooner you face up to these and acknowledge these the sooner you can begin to do something about it. Now compare your total debt repayments to your maximum disposable income figure (MDI). You will find yourself in one of the following three situations;
1) Your MDI figure is more than your monthly debt repayments.

Should you find yourself in this situation you should consider increasing your debt repayments. Do not increase them to more than your MDI figure or you will be over committing yourself. However, by increasing your repayments you will pay off your debts sooner and so will pay less overall interest. This is far more cost effective that putting this extra money into a savings account.

2) Your monthly repayments exceed your MDI figure.
If you are in this situation you will be in a ‘state of increasing debt’. This is a worrying and scary place to be. You are probably struggling with your repayments which are likely to be causing you significant stress. If not, you are perhaps only at this stage realising the situation you are in. Don’t panic as this is the time when we will begin to recontroll your finances effectively. Often those in this situation resort to drawing cash on one credit card to make minimum payments on another. This is what we call ‘robbing Peter to pay Paul’. STOP! This is not effective management of your finances don’t kid yourself. In fact what you are doing is making the situation worse. Credit card companies charge high fees for withdrawing cash from cards. You are also paying interest on this money twice. You are therefore getting yourself in more debt and this will snowball your finances further out of control. Let’s have a look at how to turn this around.

3) The two figures are more or less the same.
Don’t for one moment congratulate yourself. You are in debt. You are just about managing to make your repayments. You need to ask yourself some of the following questions;
* Where is money going to come from to deal with emergencies? Your credit card is not the answer.
* How would you cope if interest rates rise? This will increase all your repayments.
* What would you do if child care costs rise.
* What would you do if your travel costs increase train, petrol and insurance prices?
Any of your outgoings could and probably will rise. Wages don’t tend to rise at the same level as rising interest rates. They mostly tend to get left behind with inflation. You could soon find your self in situation number 2. You are effectively walking a tipe rope and need to get yourself on safe ground.
Let’s have a look then at how you can improve your situation with the following guidance.
Guidance Increasing your income
* Ask for a pay rise. If you don’t ask you won’t get!
* Consider working more hours or doing regular overtime.
* Look for a promotion or to change jobs to higher paid employer.
* Look for a second job to supplement your income.
* Claim every state benefits as you can call the benefit enquiry line on 0800 88 22 00.
* Consider a lodger a great source of additional income to the household.
* Sell any unwanted items. This could be through a car boot sale or over the internet on www.ebay.co.uk or www.amazon.co.uk/marketplace
*
Guidance Reducing your outgoings
* Reduce your food bill by buying stores own branded products instead of more expensive brands.
* Use supermarket vouchers and coupons and take part in their award schemes.
* Cut down on takeaways these are expensive and unnecessary.
* Take a packed lunch to work. This is far cheaper than buying lunch from the local sandwich shop every day.
* Give up smoking this will save you a small fortune.
* Cut down on child care costs by asking friends and family to help.
* Switch utility providers. Shop around for the cheapest deals on phones, electric, gas and water it costs nothing to change suppliers.
* Set up direct debits. This can gain you substantial discounts particularly with utility companies.
* Shop around for insurance you will be surprised at the savings you could make.
* Ask yourself ‘do you really need all the things listed on your outgoings list?’. Cancel things like gym memberships. It is a lot cheaper to pay for the facilities at your local authority leisure centre when and if you use them.

Guidance credit cards

There are two main credit reference agencies in the UK. These are Experian and Equifax. You can write to these and request to see a copy of your credit file. Under the Data Protection Act you can ask to see any information companies have on you at any time. These two agencies normally ask you to send a £2 cheque for administrative purposes with your request for the file. Go through your file carefully. If there is incorrect information on the file about you there is an appeal process you can follow to get this information removed. You can also ask that notes be entered on your file therefore giving explanations to issues that show on the file. Visit their websites for more information.
If you have exhausted the above advice and guidance and you are still struggling with debt you may find the following contacts useful;

Debt Consolidation is Possible for Non-Homeowners

There are different ways of consolidating debt and even without the aid of a consolidation loan, a debt reduction of up to 60% is easy achievable. There are professional negotiators that can agree with your creditors new repayment programs along with reductions on the interest rate you pay for your outstanding debt and sometimes even a cut on your debt’s principal.

Debt Consolidation Agencies

Before contacting a debt consolidation agency you need to be aware of what they are capable of doing and compare that with your financial needs. Using the services of a debt consolidation agency is a decision to be taken as last resort. Once the fact that you’ve got into a debt consolidation program is reported, your credit history will reflect this and your ability to get finance will be considerably diminished.

However, if your current bills, loan installments, unpaid credit card balances and all other debt have become an unbearable burden, then a debt consolidation program might be your only chance to avoid other more extreme measures like bankruptcy.

A debt consolidation agent will be assigned to your case. He will gather all the information available about your credit, your outstanding debt, your income, your assets, etc. and with that information he will design a plan. He will contact your creditors and negotiate with them. Since your creditors want to get paid, they’ll agree more flexible conditions and they will resign to charge high interests on your debt. They know now that if a consolidation agent is taking care of your debt chances are that if they don’t cooperate, they might get nothing.

There are mainly two different options after negotiation. You may obtain new repayment schedules with lower rates and lower monthly payments you’ll be able to afford or sometimes the agent agrees with the creditors a reduction on the whole amount of debt in exchange of immediate cancellation of their bills, balances and loans. If the agent takes this second path, he probably has arranged for you to get approved for a consolidation loan. The money obtained will be used to repay the new negotiated debt and you’ll end up with a single monthly payment: The loan installments.

Consolidation Loans

With the aid of a debt consolidation agency, it is much easier to get a consolidation loan in order to cancel your debt. The lender knows for sure that the money will be used to repay and cancel all your debt. Probably, the agency will arrange for the money to be directly transferred to the creditors. The lender will then be your only creditor which lets him in a privileged position when it comes to recovering his money if he has to take legal action in order to do so. And that is the main reason why with the help of a consolidation agent non-homeowners can get approved for debt consolidation loans too.

Is Non-Homeowner Debt Consolidation Possible?

There are different ways of consolidating debt and even without the aid of a consolidation loan, a debt reduction of up to 60% is easy achievable. There are professional negotiators that can agree with your creditors new repayment programs along with reductions on the interest rate you pay for your outstanding debt and sometimes even a cut on your debt’s principal.

Debt Consolidation Agencies

Before contacting a debt consolidation agency you need to be aware of what they are capable of doing and compare that with your financial needs. Using the services of a debt consolidation agency is a decision to be taken as last resort. Once the fact that you’ve got into a debt consolidation program is reported, your credit history will reflect this and your ability to get finance will be considerably diminished.

However, if your current bills, loan installments, unpaid credit card balances and all other debt have become an unbearable burden, then a debt consolidation program might be your only chance to avoid other more extreme measures like bankruptcy.

A debt consolidation agent will be assigned to your case. He will gather all the information available about your credit, your outstanding debt, your income, your assets, etc. and with that information he will design a plan. He will contact your creditors and negotiate with them. Since your creditors want to get paid, they’ll agree more flexible conditions and they will resign to charge high interests on your debt. They know now that if a consolidation agent is taking care of your debt chances are that if they don’t cooperate, they might get nothing.

There are mainly two different options after negotiation. You may obtain new repayment schedules with lower rates and lower monthly payments you’ll be able to afford or sometimes the agent agrees with the creditors a reduction on the whole amount of debt in exchange of immediate cancellation of their bills, balances and loans. If the agent takes this second path, he probably has arranged for you to get approved for a consolidation loan. The money obtained will be used to repay the new negotiated debt and you’ll end up with a single monthly payment: The loan installments.

Consolidation Loans

With the aid of a debt consolidation agency, it is much easier to get a consolidation loan in order to cancel your debt. The lender knows for sure that the money will be used to repay and cancel all your debt. Probably, the agency will arrange for the money to be directly transferred to the creditors. The lender will then be your only creditor which lets him in a privileged position when it comes to recovering his money if he has to take legal action in order to do so. And that is the main reason why with the help of a consolidation agent non-homeowners can get approved for debt consolidation loans too.

How to Consolidate Credit Card Debt

It is so easy to get heavily into debt on credit cards that you within a few months or even weeks you could find yourself not being able to keep up with the repayments. If this is the case, then you should think about consolidating your credit card debt. Consolidating your debt can make it easier to manage your money problems as well as helping you to save money. Here are some useful hints about consolidating credit card debt.

What is consolidation?

Consolidation is where you take all of your debts and combine them into one debt. For example, if you have 2 or 3 credit cards with a balance on them, you could get one credit card to cover all of the debts and transfer each balance onto this card. This way all of your debts are covered in one place and you only have one bill to pay.

How to consolidate?

There are different ways you can consolidate your credit card debt. One way is to get out a loan in order to cover your credit card debts and then pay off your credit cards using this loan. Then you can pay back the loan over a longer period of time. Although this is good because the interest rate will be lower than the credit cards, it will most likely take you longer to pay off. Another way is to get a credit card that has a limit that can cover the debts you have, or at least most of them. This way you can put all your debts in one place and pay them off.

Cards for consolidation

In order to consolidate your credit card debt onto one credit card, you need to make sure that you get the right card in order to make it worthwhile. Getting a card with a higher or equal interest rate than you currently have will not make any difference. Instead, look for a card with a lower interest rate that will help you to save money and pay off debts quicker.

0% cards

The best cards to get for consolidation are cards that offer 0% interest on balance transfers. Some of these cards offer 0% for up to one year, which will mean that you will pay no interest on the balance you transfer to the card for a year. This can save you a lot of money as well putting all your debt into one convenient place. For example, if you have a balance of around £3,000 to transfer from 15% cards, with 0% for a year you could save around £200. These cards are especially good if you can pay off the debt within the promotional period.

Cancel your cards

Remember, when you consolidate your credit card debt, it is important to cancel all or some of the cards that you have transferred from. Although cancelling too many cards can hurt your credit rating, it is better to cancel them, as this will stop you from being tempted to use them again and thereby further increasing your debt. If you have 2 or 3 cards with no balance, then get rid of all but one of them so that you have less chance of increasing your debt. If you consolidate your credit card debts correctly then you will make paying your bills easier and save yourself money on interest payments.

Peter Kenny is a writer for creditcards-gb.co.uk Please visit us at Credit Cards and 0% Credit Cards
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