When you have credit card debt, it might be all you think about. You worry about how you are going to pay the bills next month based on how high they were last month. You are concerned that you only pay the minimum amounts, just to get by, and that is only covering the interest.
How are you actually ever going to pay down the debt? In these cases, you might want to think about credit card consolidation in order to pull yourself out of the debt in a way you can afford. Here are a few tips to help you successfully consolidate the cards into one loan.
Why You Should Consolidate
Credit card consolidation companies are going to want you to think that consolidation is a miracle way out of the debt you are in with your credit cards. That’s not necessarily the case. For one, credit card consolidation isn’t going to work for everyone. It’s not a good outlet for you, for example, if you have too much debt and you can’t afford the payments even if you do consolidate. But it can really help many situations.
If you do the research, know what you owe, and what you can pay per month on a new loan, and you find that it will improve your financial situation overall, consolidating is a good idea. You can simplify your payment situation and get a fixed rate, most likely with lower interest. You want to consolidate only if the monthly payments you will end up with are lower than they were before, and are affordable to you. You want to be able to start paying the debt down, not seeing it rise or even stay the same. Since not everyone has the same needs, debt consolidation doesn’t work in every situation.
Why You Might Need Other Options
If you fit into the above scenarios, that’s great. You can move ahead with credit card consolidation. But there are lots of variations on situations and debt types and amounts and there are some people who should not move ahead with a consolidation loan.
For example, if you run the numbers and you find that once you consolidate the debts into one loan, you still can’t afford the payments, then there is no point in going through the process. Also, not every consolidation loan is a good thing.
There is some that charge you high interest rates or extra fees for a variety of things. In those cases, you end up paying more on your loan than you were before. You want to save money, not spend more money that you don’t have. If you find that to be the case, you either need different consolidation options, or another choice altogether.
Consolidating Is No Miracle
If you decide that credit card consolidation is the way to go for your financial future, you need to recognize that you are replacing your old debt with a different debt. In other words, you are still in debt. Are you in a better situation now?
You have lower payments and lower interest rates. Your debt is all in one place and you can pay only one bill each month. Plus, you have an end date on that loan so you know when you will be able to crawl out of that debt. But, in the end, you are still in debt and it is still going to take work to dig your way out of it.
As long as you stick to the payment schedule you have agreed upon with the lender, it can happen. But it’s not going to be an overnight miracle success story.
It is in your best interest to speak with financial professionals whenever you are considering credit card consolidation in any way. Once they understand your circumstances, they can help you to figure out what the best answers are for your success.
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