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Credit Card ConsolidationCredit card or debt consolidation sounds like a fresh start, a new beginning, a clean slate. When consumers find themselves nearly drowning in unsecured debt, a consolidation loan seems like the best option. A consolidation loan pays off existing debts and replaces several monthly payments with just one easy and much more manageable payment. Generally, debtors who qualify for a consolidation loan receive a lower interest rate as long as there is some security against the loan, or collateral, usually a home mortgage. The problem is that the debtor has substituted secured debt for unsecured debt and now risks losing his or her home if the loan is not paid back according to the agreement. Even more troubling is that many do not alter the behavior to over-spend and begin to reuse the credit cards, often times ending up right back where they started only now with double the amount of debt. A credit card consolidation loan offers a quick solution to a threatening problem; however, it becomes a recurring problem to many as they continue to use and add to those credit card balances. A shocking 77% of people who go through a credit card consolidation are back in the same position of credit card debt in 2 ½ years. Not everyone in serious credit card debt owns a home or a car to use as collateral. Many turn to applying for low or zero-percent interest rate credits cards and transfer balances, if they qualify, and if they do, these low or zero percent interest rates are generally not at this rate for life. Be sure to read all of the fine print and know how long the introductory offer will last and what the actual percentage will be once that time period is over. Late payments, or only one late payment, will cause the interest rate, finance charges and minimum payment to skyrocket, which is probably listed in the fine print as well. The way to avoid this from happening is to pay critical attention to making the monthly payments and never fall behind. The debt consolidation route should be thoroughly reviewed and proceeded into with caution. It can feel like a fresh start, new beginning and clean slate as long as the primary lesson was learned and consumers practice discipline and not find themselves in even deeper in a few years. Debt settlement does not substitute debt for more debt. It forgives a portion of the debt, saving the consumer thousands of dollars and simultaneously teaches a change in lifestyle, which helps consumers avoid repeating the same behavior. |
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Disclaimer: Debt Consolidation Deals, Inc. does not provide legal, investment or Tax advice. If a client needs legal services or legal expertise, they must seek the advice of a licensed attorney. Individual program results may vary. |