Credit Card Debt Consolidation: Advantages and Disadvantages
Be careful about credit card spending. Do not spend more than you can
afford. These words can sometimes be easier than said. There are many that
follow these principles but sometimes circumstances can lead to huge debt
that becomes unmanageable. Is credit card debt consolidation the solution to
this problem? What are the advantages and disadvantages of credit card debt
consolidation? How to find the right credit card debt consolidation? This
article will answer these questions.
What is a debt consolidation program?
This is a loan that will pay off your loan. You will be paying the debt
consolidation company. There are many ways these debt consolidation
companies work. The popular method is to take payments from you and
distribute to your lenders (credit card companies). All your loans will be
consolidated into one payment usually withdrawn directly from your bank.
These programs make the borrowers life easier. There are some advantages
and disadvantages to debt consolidation programs, which will be discussed
As a rule of thumb, if you have many different credit card payments with
high interest rates, then debt consolidation can help you manage your debt
with only one bill and lower interest rates. These debt consolidation
companies negotiate a lower interest rate. If your interest rates are around
30%, the debt consolidation programs can reduce your interest rates to
between 12% - 18%. These programs require a monthly admin fees, which is
usually below $50.
Finding a good debt consolidation program / company
Finding the right debt consolidation company is the key to successfully
consolidating your debt. There are a few scams in this business so it is best to
proceed cautiously to avoid debt consolidation traps.
1. Word of Mouth: Ask your trusted friends if they have been in any debt
consolidation programs or know of anyone who has been in these programs.
This is the best option. A lot of guesswork is removed and