subject: Credit Card Consolidation [print this page] Credit card consolidation is the solution for many consumers that struggle to pay off unpaid charge card debt. Debt is an issue that plagues many individuals today. The struggle to be freed of it is a fight that does not have to be handled alone. There are many charge card consolidation programs for individuals that wish to eliminate charge card debt.
The first charge card debt consolidation program is to utilize the help of a consolidation company. These companies will negotiation on your behalf to the charge card companies to lower or freeze your interest rate. This is done with the intention of rolling your high monthly charge card payments in to one affordable payment. Going through a charge card debt consolidation program will stop creditors or collection agencies from calling. Most consolidation companies will attempt to preserve your credit rating while in this process. The consumer must bring in all current statements for outstanding revolving lines of credit. Consumers will benefit from the credit card relief of interest burden. While utilizing this consolidation program, the consumer will be unable to utilize these cards for purchases. In addition, this type of consolidation program can be used for debt outside of charge cards as well.
The preferred method of credit card debt consolidation is to pay it off without the help of an outside company. The reason for this method is because the credit history for these charge cards will remain intact. Most often the result of a consolidation program with an outside company is that the charge cards are closed upon pay off. This is because the charge card companies do not want to keep the account open due to the loss of revenue based on interest. Therefore dealing with charge card debt in this manner will preserve the account as well as boost your credit rating.
The step by which to achieve this is to first assess your current financial situation. Find out in what areas you can cut cost and save money. For instance, converting from a wireless cell phone plan to a prepaid plan will often save the consumer 25% to 40% on their monthly bill. There are other cost cutting tips that will free up income to utilize toward debt. Once this is enacted, the funds will be used to pay off debt.
The next step is to transfer high interest balances on to lower interest credit cards. This will increase the amount that is applicable to principal balances resulting in a faster payoff. Now it is time to payoff the charge card debt.
Consumers will make regular monthly payments on all credit cards. With the additional funds freed up during the cost cutting analysis step, we will start with the lowest balance charge card first. The reason for paying off low balance credit debt first rather than high interest credit debt is related to the method in which charge card debt balance is paid off. We start with the lowest charge card debt first because the monthly payment upon pay off will be rolled into the payment of the next highest charge card debt. For example, if our lowest balance charge card debt monthly payment is $30 we can use this amount plus the monthly payment for the next card to pay off debt. We continue using this process until all charge card debt is paid off. Consumers will be one step closer to credit card relief from high interest debt.Credit card consolidation will give the user a structured process to reduce credit card debt.
