Having credit card debt can be a huge ongoing stress and may often keep you up at night and leave you feeling like there’s no way out. Finding a solution to this problem depends on your financial situation but debt consolidation could help you to lower your payments and may provide some relief from the large interest you’re paying on your current credit card.
Consolidation of your debts means that you place everything into one monthly payment, whether this is several credit cards or loans. This can help to make your monthly payments much simpler and gives you the peace of mind that all of your debts are being managed in one account and you know where you are from month to month.
If you are thinking about this route, it may be advisable to seek the advice of a credit counselor who can help you with the options available to you, placing your debt repayments into a financial plan that considers your living expenses too. Alternatively, if you are concerned that you aren’t going to be able to pay off your debts, seeking the advice of a specialist, e.g. a bankruptcy attorney in Dayton, may be the best option.
It is always worth speaking to your individual creditors about your financial situation to see if they can do anything to help you too. While you may feel as though they’re constantly hounding you to make payments on your loans / credit cards, they may be flexible with your repayment plan. Approach them and see if they may accept a lower monthly payment – you might be surprised because they’d rather receive a smaller sum than nothing at all.
Using One Credit Card Account for All Your Debt Balances
In order for you to consolidate all of your debts into one place, many credit card companies offer the option of low-interest or zero-percent balance transfers, which create lower payments for you and keep everything in one place.
If you are thinking of going down this route, it’s vital that you look into the small print as some credit companies will only offer this rate for a short period of time. Equally, if you miss or are late with a payment, they may up the interest rate. You may also be subject to a balance transfer fee that will normally be a certain percentage of the amount that you’re transferring onto this card.
To make sure you benefit from one of these cards, you’ll need to carefully calculate how much you’ll save and for how long you’ll receive these lower interest rates. Take into account if there are any additional fees that may affect your payments and look out for interest that you pay on purchases made after you’ve taken the balance transfer offer. It may be worth having a separate card for purchases you make after you’ve consolidated your debts.
Debt Consolidation Loans to Collate Your Debt Payments
Another way you can put together all of your debts is to place them into one loan, which many installment loan lenders, credit unions and banks will offer. Again, this will simplify your repayments and it’s more than likely that these loans will be at a lower interest rate than what you’re currently paying. While it does offer a solution to paying off your debts, it is important that you manage all of your other finances too as incurring new debts on top of this loan could place you in an even more difficult situation than before.
These types of low-interest loans can also have a certain period of time in which the “teaser rates” are available for. Increased interest rates may be applied to the loan after this period of time, so always check this before accepting one of these loans. Furthermore, always look out for any costs or hidden fees that may be applied to your account that you won’t have to pay on your current payment plans. You may also find that due to your debt you might not be able to get the best interest rates, so always shop around to see who can offer you the best solution.
To make sure you’re getting the best deal, add up all of your current payments (including the interest and fees that you have to pay) and compare these with the payments that you would be making on the new consolidation loan. Look at what the interest rates increase to after the “teaser rates” end and compare the two to see if consolidating your debts is the best financial solution for you.
Spencer Osborne enjoys sharing his expertise on monetary issues online in his articles and on various discussion forums. He has worked in the finance field for many years and hopes his knowledge will be of use to others.
