Credit Card Debt Consolidation - How It Can Work For You
Credit card debt consolidation is a good way to get out of the vicious cycle of unending card debts that sap out your money over exorbitant penalties and interest charges.
Most people own more than two credit cards, and consolidation your debts into one loan with lower interest charges will allow you to finally get off the hook.
With the needed discipline, you will be able to slowly ease out of debt and get back to more manageable debt management in the future.
A debt consolidation loan can come from a variety of sources.
It can be from another relatively low-interest charging credit card company offering low balance transfer rates of all your credit balances into a new account.
It can also come from a personal loan from a lender specializing in credit card debt consolidation.
Some even use a home equity loan to consolidate different types of debts into one financial tool.
Remember that a credit card debt consolidation does not reduce the amount of debt itself - rather it offers you a more financially sensible way of paying down on your debt so you don't get eaten up by interest charges.
The trick is to pay more than what is due so you eventually lower your loan balance.
So apart from offering you lower interest rates, consolidated loans give you the option of actually getting out of debt slowly and surely.
You get to save a significant amount of money over time due to interest payments saved.
But debt consolidation also comes with some risks.
For one, using a home equity loan puts the property at risk whenever you default on a payment.
If you use loans from retirement plans and 401Ks, retirement contributions are usually stalled until the loan is fully paid back which will mean lesser retirement proceeds for you.
The biggest risk lies in the borrower who takes advantage of the freed-up cash due to lower monthly payments and revs up in a spending spree once again.
Instead of putting in the extra cash to start knocking down on the principal, some people just opt to spend rather than address pending debts.
But with the right amount of discipline, credit card debt consolidation is a good pathway to future financial freedom.
Most people own more than two credit cards, and consolidation your debts into one loan with lower interest charges will allow you to finally get off the hook.
With the needed discipline, you will be able to slowly ease out of debt and get back to more manageable debt management in the future.
A debt consolidation loan can come from a variety of sources.
It can be from another relatively low-interest charging credit card company offering low balance transfer rates of all your credit balances into a new account.
It can also come from a personal loan from a lender specializing in credit card debt consolidation.
Some even use a home equity loan to consolidate different types of debts into one financial tool.
Remember that a credit card debt consolidation does not reduce the amount of debt itself - rather it offers you a more financially sensible way of paying down on your debt so you don't get eaten up by interest charges.
The trick is to pay more than what is due so you eventually lower your loan balance.
So apart from offering you lower interest rates, consolidated loans give you the option of actually getting out of debt slowly and surely.
You get to save a significant amount of money over time due to interest payments saved.
But debt consolidation also comes with some risks.
For one, using a home equity loan puts the property at risk whenever you default on a payment.
If you use loans from retirement plans and 401Ks, retirement contributions are usually stalled until the loan is fully paid back which will mean lesser retirement proceeds for you.
The biggest risk lies in the borrower who takes advantage of the freed-up cash due to lower monthly payments and revs up in a spending spree once again.
Instead of putting in the extra cash to start knocking down on the principal, some people just opt to spend rather than address pending debts.
But with the right amount of discipline, credit card debt consolidation is a good pathway to future financial freedom.
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