subject: How You Can Successfully Consolidate Your Credit Card Debt [print this page] Many consumers experience difficulty in keeping up with their monthly credit card payments. It can really be a stressful situation to be in. If you want to end this dilemma, why not try consolidation? This is a process of "combining" all your credit card debts into a single account, which will allow you to focus on your payments without being pressured by your credit card companies.
What options do you have for consolidating credit card debt? Listed below are three methods of debt consolidation that you may consider:
HELOC or Home Equity Loan. A Home Equity Loan or HELOC is guaranteed by the borrower's home. The available loan amount you can get will be determined by the value or 'equity' of your home.
This type of loan is different from a personal loan because it gives the borrower the option to take out funds in installments within the given time period. That means the borrower can take out any amount within the borrowing period as long as the value does not exceed the Home's Equity.
The repayment period will start according to the lending company's terms. However, consumers are advised to be cautious about using this option since falling behind on your loan payments can lead to the repossession of your property.
Debt Consolidation Loan. There are different reasons why people apply for a personal loan and one of them is to consolidate credit card debt. Personal loans are available from banks, credit unions, and commercial lending institutions.
A personal loan can either be secured or unsecured, depending on the amount you need and the lending company you choose. If you need a large amount to pay off your credit card debts, you may opt for a secured personal loans and submit collateral since this type of loans can provide you a bigger amount of cash for your debt repayment.
After getting an approval, the borrower will be subjected to the debt consolidation lender's Terms and Conditions. Usually, the repayment period can last from five years to ten years or much longer depending on the loan amount.
If you don't have a property to pose as collateral, there are unsecured consolidation loans in the market, however, the loan amount you may get is much lower. Furthermore, consumers are warned against predatory lenders who may try to take advantage of the situation by imposing unreasonable interest rates and fees.
Balance Transfer Credit Card. Lastly, you can consolidate debts by acquiring a zero interest balance transfer credit card. Transfer your balances to a zero-rate card to eliminate APR costs. Since a borrower won't have to pay for additional interest rate every month, he/she can save more money and use it to repay his/her debtors.
Nevertheless, it's important to remember that the 0% APR deal is not a permanent offer. After the introductory period (6 months or more), the regular interest rate will apply. Make sure that you understand the Terms and Conditions of your issuer before submitting your credit card application. You must also watch out for zero interest credit cards since most of them come with hidden fees or high charges (annual fee, late penalty fee, over-the-limit fee, transaction fees, etc.). Most importantly, do your best to complete your repayment while the zero interest rate applies.
