If you are like most people who use credit cards, you are probably paying a high interest rate on your credit cards. If you don’t even bother to check your balance, you could be paying hundreds of dollars in interest each year. It can get so bad that sometimes it can be better for just paying the minimum amount every month. But what if you could no longer pay off your balances? What would happen?
If you’ve been thinking about eliminating your high interest rate credit cards, but can’t seem to come up with the money to do it, there is still a way out. It is called debt consolidation and it can be a great help for you. If you have several credit cards and several loans, all with different rates, and you can’t seem to make your monthly payments, you might be looking for some sort of assistance. Some consumers to file bankruptcy just because they can’t afford their debts. They might not have thought about how using credit cards and loans might affect their credit, but now that they are in debt, they have to take care of it.
Most people don’t realize how much interest their credit card companies charge them every month. It’s actually double or triple the normal interest rate. There is more going into your bank account than just the original credit card payment every month. There is also a fee every time you use the credit card, and an extra charge each time you use it to add to your debt. These fees can add up fast. In fact, many people find themselves with hundreds of dollars in debt simply trying to pay their credit card debt each month.
There is a way out of this. There are many consumers who have found that by consolidating their credit card debt into one loan with a lower interest rate, they can eliminate up to half of their debt each month. This allows them to pay only one bill each month instead of several. They can be up and running again within a few months, making good payments and living the dream life that so many consumers believe is possible. It’s definitely true that many consumers can eliminate up to half of their credit card debt by consolidating their debt.
The way it works is pretty simple. You make a down payment of anywhere from five hundred to one thousand dollars, depending on the debt and the credit card issuer. You then take out a loan at a fresh, lower interest rate than your credit cards. When you pay off your new loan, you simply make another payment to the same credit card issuer at a completely different interest rate, and you are back where you started.
It is important to understand though that consolidating your debt into one loan with a lower interest rate does come with its share of headaches. There are going to be some calls from your creditors, and yes, you will need to respond. Yes, you will have to tell them that you have consolidated your credit cards into one single account. Yes, you will also have to explain to them that the money you will be paying in that new loan has been cut from your current credit cards. Most often this is done in the form of a reduced interest rate, although sometimes a partial fee may also be charged.
Even though your payment history with your credit cards might suffer slightly, it is still possible to save money. You can do so by applying for a zero APR loan instead of a consolidation loan. These kinds of loans are not subject to any particular credit score, so you can use whatever your current credit score is to qualify. In fact, many financial lenders actually offer zero APR loans right now, but you just need to know which lender. With these kinds of loans, you will only pay one monthly payment to cover all of your debt, instead of numerous payments to various credit card issuers.
Another option for getting out of high interest credit card debt is to seek a home equity loan or line of credit. A home equity loan is secured by your home, and thus the interest rate is likely to be very low. On the other hand, a line of credit works on a revolving basis and the interest rate may go up and down as interest rates on loans and credit cards fluctuate. Both of these options are attractive to those who want to get out of high interest credit card debt, but both of them require careful planning and financial responsibility.