Should You Consolidate Credit Card Bills?
Is it a good idea to consolidate credit card bills? That depends on how much debt you have and how much money you make. Using a third party to consolidate credit card bills will leave a permanent blemish on your credit report and it may never be as high as it could, but for many it's the only option. The average American has five credit cards. How they manage those five, I don't know. I managed to get into serious trouble with only two!!
When you have a company consolidate credit card bills for you, they will negotiate with the banks and creditors that you have outstanding debt with to lower the amount that you owe. After the negotiation is finished, you will have a total amount due that will be broken down into manageable monthly payments. The amount that you owe will determine how long your term is and how much you will pay each month. Usually, the terms are between five and seven years to consolidate credit card bills.
Let's take a look at when it's a good idea and when it's not such a good idea to consolidate credit card bills.
Good Times To Consolidate Credit Card Bills
Put simply, if you can't afford to pay toward the principle on all of your credit cards you should consolidate credit card bills. Either consolidate, or look at your spending habits. If you can free up enough of your income to pay them on your own take that route, but for many this is impossible.
If you are deciding whether to pay credit card bills or eat, you are obviously over your head and should seek consolidation assistance. When your debt is spread among multiple cards it can be very difficult to stay on top of all of them, and if you consolidate credit card bills it will be narrowed down to a single monthly payment.
The best time to consolidate credit card bills is when it is your last option to get yourself out of debt. If you jump into it without knowing your other options, it may cost you down the road.
Not So Good Times To Consolidate Credit Card Bills
Keep in mind that everything that a consolidation company does, you can do yourself. They may be able to do it a little bit better due to the relationship that they have with the creditors and banks, but that doesn't mean you can't get similar results on your own.
The best time to consolidate credit card bills yourself is when you only have two or three outstanding debts. Contact the credit card companies (or collection agencies) yourself to negotiate them yourself. You will be able to reduce the debt significantly. These companies would much rather get some money out of you rather than nothing. They will offer the best deal when you make the payment in one lump sum. I know this is probably not an option right away, but they will give you a few weeks to come up with the money. There are also unsecured loans available to take care of this.
If your credit score is still intact you can apply for a loan from the bank to consolidate credit card bills. This way you are paying the total amount to the creditors and only making one payment to the bank to repay the loan.
That's how you consolidate credit card bills yourself!
What Are You Waiting For?
The key is to get started right away. The longer you wait, the more the interest will build up, and the more money you owe!
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