Credit Card Consolidation Advice (DEBT RELIEF TIPS)

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Credit Card Consolidation Advice (DEBT RELIEF TIPS)

credit card consilidationCredit Card Consolidation Could Be Your Salvation

You’ve probably been on the brink of insanity over juggling the mountain of credit card bills that always seem to grow and grow because you can only afford to make minimum payments which essentially translates to paying off only the penalty rates incurred.

In short, your initial debt gets no smaller but the interests you owe accumulates more and more and you get deeper in debt each month, as time goes by.

The high interest rates in your credit cards are making your financial situation worse over time and it simply has to stop.

Just like other consumers faced with the same dilemma, you find yourself considering the idea of credit card consolidation. It sounds like a logical solution to the problem but is it really the most effective one? Let’s take a look at what is involved.

 

The Mechanics of Credit Card Consolidation

With credit card consolidation, you will essentially take out a loan to pay off all your balances from your credit cards so that you eliminate the varied and high interest rates that you are compelled to contend with. You will end up having to pay off on a fixed interest rate because you’re working with just one creditor instead of a various number of credit card companies competing for your bank account’s attention.

There are many ways through which you can go about consolidating your credit card debts. One method involves taking out a loan against a property – for instance, a second mortgage on your home – with a financial institution. This can be quite dangerous especially since you will be working with yet another debt that could cause you to lose your home in the event of a default. It’s not a popular path of debt consolidation mainly because of the current credit crunch that has been causing home property values to drop.

The other method is by transferring your balances to low interest cards or cards that offer 0% interest. While this may be considered a temporary solution to your debt problem, it does buy you more time to get your act together and exert a more proactive effort towards managing your spending.

 

Shopping around

Should you decide to go for another credit card to transfer your balances to, you’ll find a wide array of choices on the internet. Many credit card providers offer promotions such as low interest rates or 0% interest on balance transfer APRs to entice consumers into applying for their cred

it cards. The first things that you should be on the lookout for are low interest rates. You will want to consider the lowest rates in the market instead of the lowest monthly payments. The latter will just cause you to stretch out your repayments over a longer time which can just prolong your misery over your debts. Also check out the balance transfer fees and be wary of hidden charges and other costs.

More than checking on the APR, you will want to go over the other pertinent fees associated with credit card consolidation such as balance transfer costs, late fees and over the limit rates. It’s always a good idea to do some research on your options and look into the conditions of the offer closely because this is not exactly a good time for you to make the wrong choices. This could potentially cause more damage to your credit score. And finally, along with consolidating your credit card debts should be a resolution to reform the way you handle your finances. Start pulling yourself together and make sure that you get your monthly repayments on time.

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