Consolidate Credit Card Debt The Sensible Way

May 16, 2012 by  Filed under: Debt 

Credit card debt can make life feel unbearable. However, if this is the situation which you are presently in, don’t lose hope because there are debt relief strategies which will help you. If you consolidate your debt, it can help to reduce your debts fast. Also, it is not enough to consolidate credit card debt, rather it is equally vital that you do this in a sensible way, otherwise today’s savings may well turn into tomorrow’s debts.

What does it Entail to Consolidate Credit Card Debt?

First off, let’s start by considering the option to consolidate card debt. The two aspects of credit card debt, which are creating bondage in your life, are the debt principle and the double digit interest rates. While a large principle is difficult enough to deal with, for most debtors it is the double digit interest rates which increase the debt repayments. When you consolidate the debt you manage to bring down this interest rate, which will help to give you your life back.

By way of example, if a debtor owes $20,000 on their credit cards, and the average rate of interest work out at 18%, the total payment will work out at a total of $35,175 over 7 years (this is presuming minimum repayments only). Whereas if they can reduce this interest rate down to 12%, then the total amount will work out to be only $23,915, which is a savings of 31%.

So, there is no question about it, the option to consolidate works well, however, it is vital to consolidate the debt in a sane way.

How to Consolidate Credit Card Debt Sanely

While consolidation is a really good debt relief tactic, it is important to consolidate debt in way which works for you and your unique set of circumstances. For instance, many of the apparent consolidation methods, such as consolidation loans, zero interest or low interest credit card balance transfers, and even additional credit cards appear good. But they don’t deliver in the long run.

Why are these bad?

In the case of a debt consolidation loan, it is a loan and has to be paid back. So if you default, then you will find your credit rating suffering. Indeed because debt consolidation loans give the impression that your debts are lower than they are, far too many debtors take out these loans only to go on accruing new debts on their cards. Because they rack up these debts, they find that quite quickly whatever comfort they received under the consolidation loan quickly disappears and now they have to pay back the loan and the new card debts as well.

With zero balance, or low interest rate introductory offers, the offer ends quickly and is always replaced by a high interest rate. Here again, theses apparent consolidation tactics in reality turn out to be delaying tactics. Once the low interest period ends, reality settles back in and the debtor goes shopping for yet a new card or offer. However, pretty soon they have run out of credit options. By this stage they possess extensive debts across a wide range of credit schemes from credit card debts to consolidation loans to overdraft facilities and so on. Of course, once they reach the end of their credit, they are left not knowing how to pay back their debts.

Importantly, with all of these apparent debt consolidation tactics, the final result is that they only bring on more debt and drag out the repayment period.

While debt consolidation is a good strategy, the only sane way to roll out a credit card consolidation plan is in such a way that it involves responsibility on your part, whereby you understand that the process and realize that you have to stop acquiring new debts.

For most debtors this option, to consolidate debt, will involve signing up with a debt relief organization. However, for some debtors it will involve them negotiating directly with their creditors. Both options are effective, as long as you take the time out to examine which of these options is right option for you.

Should you decide to go the consolidate credit card debt route, then you should consider checking out how to go about it safely. Education is vital here. So visit: http://www.creditcarddebtsecrets.org/credit-card-debt-consolidation/consolidate-credit-card-debt

Article Source:
http://EzineArticles.com/?expert=Brian_Lawrence_Farrell

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