Christian Credit Card Debt Consolidation
Credit card debt is considered "bad" debt as it is usually charged at a very high rate of interest. Paying off the minimum amount each month means the debt is paid off over a very long period of time, increasing the overall interest paid.
Debt consolidation is when a loan is taken out and used to pay off a number of existing debts. The interest rate on the loan is lower than that charged to the credit card so your monthly repayments are lower.
There are however disadvantages. If you refinance with a loan that runs over a long period of time , for example 10 years or more, the total interest paid could end up being more.
This can be very confusing to some people so it is good to get advice.
Christian Debt Consolidation Agencies - Check them first!
Before we go any further a warning is required.
Anyone can call themselves 'Christian' or 'non profit'. You should not assume that a company calling itself Christian has the same moral values as you. A company cannot be Christian, only people can. It is a sad fact that many disreputable operators prey on vunerable people in their hour of need by using these terms in a misleading way.
So, before you even start the debt consolidation process, here is how to protect yourself:
Research the Agency:- This only takes a few minutes online
- Have they been accredited by an independent third party? Self accreditation is meaningless. Look for accreditation form a body such as the Council on Accreditation (COA)
- Are they Affiliated with a National body? (The National Foundation for Credit Counseling is a good example in the counseling field).
- Is the agency registered as a 501(c)(3) non profit community organization? Search here to find out. Any agency claiming to be non profit but not appearing on the register should be treated as extremely suspicious.
- What fees do they charge? They should be forthcoming with information on all charges before any agreement is reached. Any reluctance to divulge information is a warning signal.
- If the agency is calling themselves Christian, ask them in what way are they so. Are they associated with a local church or other Christian organization?
- Search for the agency at the Better Business Bureau. This will inform you if any complaints have been made.
Following these simple steps will prevent you from becoming a victim of dishonest operators.
When is Debt Consolidation Right for You?
This is a complicated question that has no easy answer. There are so many variables at play so each case must be examined on an individual basis. This is why a personal interview is conducted by an agency to accurately determine your current financial position.
If you are struggling to make payments on a variety of credit cards that have high rates of interest then debt consolidation is an option you should explore.
You should remember that your goals are to clear the debt as quickly as possible. You will achieve this by paying as much off as you can each month. The temptation with debt consolidation is to lower your monthly repayments to a very comfortable level by extending the period of the loan. This results in much more interest having to be paid off the loan over time. Keep the repayments as high as you can comfortably make, and the loan term as short as possible.
A debt consolidation agency should be able to show you the effect of changing each variable on a computer demonstration.
Choosing the Right Debt Consolidation Loan
If you decide debt consolidation is the right course of action for you, choosing the right loan is the next step.
Loans can be complicated and it is important to compare like with like. It is not as simple as finding the load with the lowest interest rate as fees and charges can have a large impact on the total amount paid.
The easiest way to compare each product is to ask for the total amount payable over the life of the loan. This will add up every monthly repayment with fees and charges to give you the grand total. Comparing these figures across various loans you will help you make the right decision
Take Control of your Finances
Being under financial stress is hard work but that doesn't mean you are powerless. You must be proactive and take an honest look at your situation before planning the most appropriate way to become debt free.
It is normal to feel desparate at times but you must protect yourself from unscrupulous operators out to defraud you when you are down.
Be sensible, do your research, and take control of your life.