Using a credit card means that you have an easy payment option for many purchases, but it important to keep in mind that credit card spending is the number one cause of consumer debt. Credit cards are meant to be used when a customer has no immediate funds for the purchase they desire. In order to make their money, credit cards companies charge high interest rates that begin to accumulate the minute you make a purchase. If you happen to miss a payment on your card, the interest begins to add up and in no time, you can find yourself in debt up to your eyeballs. In order to get out of the financial quicksand, consumers must change their own habits and often also apply for credit counceling.
One of the best strategies in controlling your credit is to make payments as soon as you can on the balance owed on your credit card. Credit card payments can be made much more than once each month; if you have particularly high rates and debt then it is advisable to make a payment much more regularly. These small weekly payments will be easier than a big lump sum, and each payment will reduce the amount owed, which means lower interest charges.
Serious debt trouble may mean that you have to consult an organization such as the Consumer counceling Center of America. The CCCA is a non-profit organization that is set up in order to help people pay out their unsecured debts such as those incurred by credit card spending, medical bills, and loans. It is vital to note that the CCCA is different than a consolidation company. Credit consolidation through these companies occurs when a company extends the consumer a credit loan which is used to pay off existing debt. The CCCA simply uses credit consolidation to negotiate a better interest rate with the people whom you owe money to.
The CCCA operates by taking a certain amount of money from the client each month, which is then used to pay off various creditors. Through this and other organizations, people who have found themselves in debt find that they gain a little more peace of mind as collection agencies stop calling them, payments stay current and individual accounts stay updated. Another huge benefit is that as someone else is handling the payment structure, the client will avoid the downfalls of late payment charges and delinquency fees.
It is important that people realize that applying for debt consolidation loans is not always the best way to go about paying down their fees. Institutions which offer these loans will always ask for collateral, and if you mortgage one of your assets it will be auctioned if the loan is defaulted upon. As with many problems, self-discipline combined with professional help is the key.
Friday, December 08, 2006
Credit Card Consolidation: Important Facts About Credit Consolidation
Credit card consolidation has been catching on as a popular and smart way for consumers to reduce their debt levels. The way that credit card consolidation works is like this: you obtain a new credit card with a nice size credit line and then transfer many of your outstanding loan balances over to the new card. Instead of paying 17.9%, 21.6%, or even 24% or more on credit card balances, a new low interest rate credit card can allow you to reduce your monthly payments and pay down your debt faster. Please keep reading for examples on how you can take charge of your debt.
Out with the old, in with the new
Much of the debt owed by consumers is through credit cards. If you have 1, 2, 3, or more cards, you probably are paying high interest rates on several of your outstanding balances. Your JC Penney, Macys, even your regular Visa or MasterCard can be charging you interest rates in excess of 20%! You can get out from underneath these burdens by selecting a new card with a low APR and transferring your balances over. In effect, you have created a credit card consolidation with your new card. Just dont use your old cards again as you might find yourself with more debt than you can possibly manage!
Lower monthly payments, low APR
By transferring your high balances, you can save several hundred dollars per year in interest payments. With some cards, you can even get an introductory APR of 0% for the first twelve months. After that your variable rate is likely to be lower than what you paid for your store cards, bringing home big savings for you. In addition, you will have more money to pay off your existing balances faster. In effect, a credit card consolidation can help you get out of debt quicker. Less debt, better credit rating
By paying off your debt faster, your credit rating will improve. An improved credit rating can have a positive effect on future borrowing, especially if you are considering purchasing a new car or a home. All of this good stuff happens because you made the smart decision to go the credit card consolidation route to attack your debt.
Is everyone eligible for a credit card consolidation card?
Unfortunately, that answer is no. If you have very bad credit you likely will not be eligible. Still, unlike a debt consolidation loan done through your banks lending department, there are no application fees to apply for a credit card. So, go ahead and apply and you just may find yourself selected to carry a little piece of plastic that can go a long way toward helping you to achieve credit card consolidation.
Out with the old, in with the new
Much of the debt owed by consumers is through credit cards. If you have 1, 2, 3, or more cards, you probably are paying high interest rates on several of your outstanding balances. Your JC Penney, Macys, even your regular Visa or MasterCard can be charging you interest rates in excess of 20%! You can get out from underneath these burdens by selecting a new card with a low APR and transferring your balances over. In effect, you have created a credit card consolidation with your new card. Just dont use your old cards again as you might find yourself with more debt than you can possibly manage!
Lower monthly payments, low APR
By transferring your high balances, you can save several hundred dollars per year in interest payments. With some cards, you can even get an introductory APR of 0% for the first twelve months. After that your variable rate is likely to be lower than what you paid for your store cards, bringing home big savings for you. In addition, you will have more money to pay off your existing balances faster. In effect, a credit card consolidation can help you get out of debt quicker. Less debt, better credit rating
By paying off your debt faster, your credit rating will improve. An improved credit rating can have a positive effect on future borrowing, especially if you are considering purchasing a new car or a home. All of this good stuff happens because you made the smart decision to go the credit card consolidation route to attack your debt.
Is everyone eligible for a credit card consolidation card?
Unfortunately, that answer is no. If you have very bad credit you likely will not be eligible. Still, unlike a debt consolidation loan done through your banks lending department, there are no application fees to apply for a credit card. So, go ahead and apply and you just may find yourself selected to carry a little piece of plastic that can go a long way toward helping you to achieve credit card consolidation.
How to Find a Bad Credit Consolidation Loan
Consolidating your outstanding debts can be a great way to get a debt problem under control, but if you've had the debt problem for long enough that it's had a negative impact on your credit rating then you might find getting the loan to consolidate much harder.
Finding a bad credit consolidation loan doesn't have to be difficult, however it simply requires taking a little more time and effort in shopping around and comparing different lenders. In addition to simply helping you to manage some of your debts, however, a bad credit consolidation loan can be the first step toward repairing your credit and helping to ease your overall financial burden.
The following information about bad credit consolidation loans should help you to find a lender willing to work with you and guide you toward finding the loan that's best for you and your financial needs.
How debt consolidation works
Basically, debt consolidation is a simple process. When you apply for your bad credit consolidation loan, you will end up using the money received from the loan to pay off (either in part or completely) some or all of your outstanding or overdue debts.
Once these debts have been paid off, they are no longer negatively affecting your credit report and are no longer taxing your monthly budget. In their place, you have a single payment to make the payment for your bad credit consolidation loan. This will likely save you quite a bit of money each month, as it's not very likely that the monthly payments for one loan will be higher than the combined payments of old or overdue debts.
Securing the loan
Needless to say, a bad credit consolidation loan is probably going to have to be a secured loan in addition to the difficulty of getting an unsecured loan with bad credit, it's much easier to get a lower interest rate with a secured loan. In order to get the lowest interest rate that you can, you should use the best collateral that you have available; the equity that you've built up in your home or other real estate generally is one of the preferred methods of securing loans for debt consolidation, though other high value items such as automobiles or precious metals can also be used. Once you've decided on how you're going to guarantee repayment of the loan, then it's time to find a lender.
Shopping for a lender
When you start looking for a lender to approve your bad credit consolidation loan, you should keep in mind that you will likely need to visit a wide variety of lenders both physical and online. Take the time to outline the debts that you plan on consolidating for the lender so that they can see where the money is going to go, and try to keep the total amount well under the value of the collateral that you plan on using. Request loan quotes from all of the lenders that you're considering, comparing the quotes in order to determine which one has the best interest rate and repayment terms.
Debt consolidation and credit repair
Once you consolidate your debts and begin repayment of the loan, you have a wonderful opportunity to begin improving your credit simply by paying off your loan. As the older debts that you've paid off begin to age, they'll slowly start to disappear from your credit report so long as you keep your new payments up to date, however, the positive effects that they generate will begin to bring up your credit score.
Finding a bad credit consolidation loan doesn't have to be difficult, however it simply requires taking a little more time and effort in shopping around and comparing different lenders. In addition to simply helping you to manage some of your debts, however, a bad credit consolidation loan can be the first step toward repairing your credit and helping to ease your overall financial burden.
The following information about bad credit consolidation loans should help you to find a lender willing to work with you and guide you toward finding the loan that's best for you and your financial needs.
How debt consolidation works
Basically, debt consolidation is a simple process. When you apply for your bad credit consolidation loan, you will end up using the money received from the loan to pay off (either in part or completely) some or all of your outstanding or overdue debts.
Once these debts have been paid off, they are no longer negatively affecting your credit report and are no longer taxing your monthly budget. In their place, you have a single payment to make the payment for your bad credit consolidation loan. This will likely save you quite a bit of money each month, as it's not very likely that the monthly payments for one loan will be higher than the combined payments of old or overdue debts.
Securing the loan
Needless to say, a bad credit consolidation loan is probably going to have to be a secured loan in addition to the difficulty of getting an unsecured loan with bad credit, it's much easier to get a lower interest rate with a secured loan. In order to get the lowest interest rate that you can, you should use the best collateral that you have available; the equity that you've built up in your home or other real estate generally is one of the preferred methods of securing loans for debt consolidation, though other high value items such as automobiles or precious metals can also be used. Once you've decided on how you're going to guarantee repayment of the loan, then it's time to find a lender.
Shopping for a lender
When you start looking for a lender to approve your bad credit consolidation loan, you should keep in mind that you will likely need to visit a wide variety of lenders both physical and online. Take the time to outline the debts that you plan on consolidating for the lender so that they can see where the money is going to go, and try to keep the total amount well under the value of the collateral that you plan on using. Request loan quotes from all of the lenders that you're considering, comparing the quotes in order to determine which one has the best interest rate and repayment terms.
Debt consolidation and credit repair
Once you consolidate your debts and begin repayment of the loan, you have a wonderful opportunity to begin improving your credit simply by paying off your loan. As the older debts that you've paid off begin to age, they'll slowly start to disappear from your credit report so long as you keep your new payments up to date, however, the positive effects that they generate will begin to bring up your credit score.
Can Bad Credit Consolidation Loans Save you From Bankruptcy?
Debt Consolidation Loans
Debt consolidation loans can drive away the bankruptcy menace because they are meant for easing the weight of overall debt by reducing your monthly payments into a single lower monthly installment. The money obtained from the loan is used for paying off outstanding debt that carries higher interest rates.
When requesting a consolidation loan in order to reduce the amount of money you have to set aside every month for repaying debt and thus, driving away the risk of bankruptcy, you need to make sure you include only all the debt that has higher interest rates than the consolidation loan. Otherwise the whole financial operation would be pointless. Federal student loans, for example, should be set aside since they carry very low interest rates.
Personal loans, cash advance loans, credit card debt and store card debt are the kind of debt you need to consolidate. Only if you are able to get a secured consolidation loan with a lower interest rate should you consider consolidating home equity loans, mortgage loans and mortgage refinance loans. Given that you are thinking about applying for a bad credit consolidation loan, it doesnt seem probable that you can get a lower interest rate.
The loan length is another important factor, you can considerably reduce your monthly installments by getting a consolidation loan with longer repayment programs, this implies that it will take a lot more time for you to become debt free. However, the monthly payments will be easier to afford and will bring relief to your financial situation. Bear in mind though, that longer repayment schedules carry higher interest rates, so you need to ponder this and find the loan option that best suits your needs.
Which Lender Should I Apply to?When it comes to choosing the lender, you need to decide first what kind of loan you will be applying to. If you can provide collateral, youll be able to get much better terms on your loan and you should search for lenders dealing with home loans, refinance home loans and home equity loans. These loans carry the lowest interest rates and few credit requirements making them easier to qualify for.
If you cannot provide collateral, then you should find lenders dealing with unsecured personal loans. These loans carry higher interest rates and are harder to qualify for. However they are the only option for non-homeowners or those who have no equity on their home and cannot refinance.
Since unsecured personal loans are harder to qualify for, especially if you have a bad credit score and history, you might get declined for such loans. If that is your case, dont despair, there are debt consolidation agencies that can help you reduce your debt and monthly payments without a loan. They have professional negotiators that will agree with your lenders a reduction on your debt and a new more affordable repayment program.
Mary Wise, a professional consultant with twenty years in the financial field, helps people in the process of securing personal loans, mortgage, refinance or consolidation loans and preventing consumers from falling into the hands of fraudulent lenders. Visit her site and get more aid for Bankruptcy or any other financial issue regardless of your credit. If the link doesnt work, just copy badcreditloanservices.com and paste it in your browsers address bar.
Debt consolidation loans can drive away the bankruptcy menace because they are meant for easing the weight of overall debt by reducing your monthly payments into a single lower monthly installment. The money obtained from the loan is used for paying off outstanding debt that carries higher interest rates.
When requesting a consolidation loan in order to reduce the amount of money you have to set aside every month for repaying debt and thus, driving away the risk of bankruptcy, you need to make sure you include only all the debt that has higher interest rates than the consolidation loan. Otherwise the whole financial operation would be pointless. Federal student loans, for example, should be set aside since they carry very low interest rates.
Personal loans, cash advance loans, credit card debt and store card debt are the kind of debt you need to consolidate. Only if you are able to get a secured consolidation loan with a lower interest rate should you consider consolidating home equity loans, mortgage loans and mortgage refinance loans. Given that you are thinking about applying for a bad credit consolidation loan, it doesnt seem probable that you can get a lower interest rate.
The loan length is another important factor, you can considerably reduce your monthly installments by getting a consolidation loan with longer repayment programs, this implies that it will take a lot more time for you to become debt free. However, the monthly payments will be easier to afford and will bring relief to your financial situation. Bear in mind though, that longer repayment schedules carry higher interest rates, so you need to ponder this and find the loan option that best suits your needs.
Which Lender Should I Apply to?When it comes to choosing the lender, you need to decide first what kind of loan you will be applying to. If you can provide collateral, youll be able to get much better terms on your loan and you should search for lenders dealing with home loans, refinance home loans and home equity loans. These loans carry the lowest interest rates and few credit requirements making them easier to qualify for.
If you cannot provide collateral, then you should find lenders dealing with unsecured personal loans. These loans carry higher interest rates and are harder to qualify for. However they are the only option for non-homeowners or those who have no equity on their home and cannot refinance.
Since unsecured personal loans are harder to qualify for, especially if you have a bad credit score and history, you might get declined for such loans. If that is your case, dont despair, there are debt consolidation agencies that can help you reduce your debt and monthly payments without a loan. They have professional negotiators that will agree with your lenders a reduction on your debt and a new more affordable repayment program.
Mary Wise, a professional consultant with twenty years in the financial field, helps people in the process of securing personal loans, mortgage, refinance or consolidation loans and preventing consumers from falling into the hands of fraudulent lenders. Visit her site and get more aid for Bankruptcy or any other financial issue regardless of your credit. If the link doesnt work, just copy badcreditloanservices.com and paste it in your browsers address bar.
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