HOW MUCH? - debt consolidation

Why should I consolidate my credit card debt?

   
 

Introduction

You might be wondering if consolidating your credit card debt is something you should be considering. There are some very valid reasons for you to consider consolidating credit card debt including the opportunity to slow down monthly payments and get out of debt faster than ever before.

Lower Monthly Interest Payments

The basic premise of debt consolidation is to lower your rate of interest - generally when you consolidate what happens is you can save thousands of dollars on interest. You're wondering how this happens? Consider this: Most credit card consolidation companies charge rates that are 10% to 15% lower than credit card rates. While the rates might vary depending on your overall credit score, you can still save hundreds or even thousands of dollars in simply interest rate payments over the life of your debt. If you are currently paying 18% on a credit card and you are able to obtain a consolidation loan at 9% you're saving tremendously. Depending on your total amount of debt this can quickly add up to savings that you can't find anyplace else!

Debt Reduction

You can substantially reduce your overall debt because most consolidation companies are going to negotiate with your creditors to reduce finance payments, interest payments and more. This is typically referred to as debt settlement. Additionally, you're not going to be accruing additional monthly charges that can burden you even further. Therefore your overall debt is going to be lower.

Stop Harassing Phone Calls and Letters

If you're having difficulty meeting your monthly payment obligations, chances are you're getting regular telephone calls and letters from your creditors. Once you sign an agreement to consolidate your debt, your creditors will be notified and you'll be making one flat monthly payment which will be tailored to your current financial standing. This means that your creditors will stop asking you about overdue payments and you'll no longer be dreading your phone ringing or opening your mail!

Reduce Your Debt Faster

Because your monthly payments will be going towards the principal amount of your debt, your credit card payments will now be going towards your actual balance. No more monthly service charges, no more added monthly interest payments - your balances are now being paid off in record time. Imagine being free of all credit card debt!

Cutting Up Credit Cards
© iStockphoto.com - mathieukor

Financial Learning Opportunity

One of the most significant benefits of credit card consolidation is the opportunity that you have to turn this into a learning opportunity! No more will you continually worry about your credit card bills and financial situation. Instead, you'll become an empowered personal finance expert.

When you're considering consolidating your credit card debt be sure to look over your financial status carefully. Once you've made the important decision to consolidate your debts, don't use your credit cards - better yet, cut them up and get rid of them! The easiest trap to fall into is using your credit card while it's part of a consolidation plan. Don't do it. Protect your financial future. (If you must use a card, you may want to consider a prepaid credit card which is financially similar to paying with cash.) Congratulations on your willpower and determination to improve your financial situation. You are not alone!

See also: Oprah's How To Get Out of Debt

Related topics: Credit Card Debt Consolidation, Consolidate Debt - A New Financial Life

 

 

 

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