We frequently come across the term credit card consolidation when searching a way out to resolve the credit card debt crisis. As the name suggests credit card consolidation refers to a process of merger of outstanding balances on various credit cards into a one credit card.
How it Works?
Generally for consolidation purpose a credit card which offers lower interest rates and fines is selected. By opting credit card consolidation you get two basic benefits. The first one is you have to make a payment to only one credit card agency and hence the chances to overlook the due dates are minimized. Secondly, you need to pay lower monthly payments but eventually for an extended period. It is not a widely accepted solution to your credit card debts. If you consider, it makes you a lot of inconvenience, to write and send more than one checks to credit card agencies on due time, it would be better to take the advantage of credit card consolidation.
Credit Card Consolidation against Security
While you deem credit card consolidation as a solution of your credit card debt, a few alternatives are available to you. You can offer some asset to a debt consolidation company as a security against your consolidated loan. Home finance loan may be one option.
If the banks are assured that you shall not make a loan repayment default by the way of securing some asset as a guarantee, they will feel comfortable to extend you a loan. The amount of finance could be utilized for settlement of outstanding balances of various credit cards. You need to care for only one payment now.
Personal Installment Loan for Credit Card Consolidation
Your area banks would be extending personal installment loans (PIL) it could be another choice of your credit card consolidation. Take a PIL and utilize it to settle your outstanding credit card balances. To take a PIL, you need an excellent credit history, if it is be confident. Else, no need to mention that you shall be under another debt burden with higher interest rates. 0% introductory credit cards: another fantastic idea if you can grab it. Transfer all your outstanding balances to 0% introductory credit card and it’ll save much of your financial expenses you are currently paying.
Credit card consolidation is a double edge sword; it can improve or deprive your credit history. How you utilize it is up to you. It can be a safe bet when you are under heavy debt burden and really wanted to relieve. Contrary to that if you continue using your credit card extensively once you have consolidated your credit cards debt it will create more problems for you. Avoid swapping your credit card. Have you no money to buy something, better to stay away, it is an indication that you cannot afford it.
by Gemma Maddock