Easily Consolidate Credit Card Debt

So, you've gone a little wild and crazy and maxed out a few of your credit cards. Ok, you've maxed out ALL of your credit cards! Without really thinking about the consequences of your reckless spending sprees, you're now faced with recurring monthly interest fees and minimum payments that are as staggering as the credit card debt itself! You’re probably thinking your only option is bankruptcy, and a few years ago you may have been right. Fortunately, other options exist that may bail you out of the nightmare associated with bankruptcy and its long-term impact on your credit. Consolidating credit card debt may just the salvation you need!

Consolidating credit card debt is the process of combining several high liabilities, high-interest-rate loans into one combined loan. Essentially, this means you take on a new loan with a lender who in turn pays off all of your other loans. On the surface, the benefits of consolidating may not seem clear, but they can be tremendous! The first thing a consolidation loan does is to lower your monthly interest rates. Credit cards can have interest rates from 13% or even as high as 28%, depending on your credit score when you applied for the loan. This means that most of your monthly minimum payment is going towards interest. In fact, making a minimum payment on a single credit card can keep you in debt almost indefinitely. With credit card consolidation loans you can expect a drastically reduced interest rate, sometimes as low as 6%! What this means is your monthly payment is going to be lower each month and more money is going to the principal of the loan and less towards interest. Another benefit of consolidating credit card debt is your minimum required payment will be vastly lower than your individual credit cards, decreasing your monthly required liability. For example, if you have 5 credit cards, all maxed out, you are required to pay a monthly minimum on all 5 cards. With a consolidation loan, you make only one minimum payment against the total consolidated loan amount.

The main concern with consolidation loans is that many people may be tempted to consolidate their unsecured loans into a secured loan. Unsecured loans allow borrowers the liberty of obtaining money with little risk to their personal possessions if they were to default on the loan. With a secured loan, borrowers must put up some form of an asset as collateral against the loan amount. Many borrowers who consolidate high interest credit card loans put their home as collateral. If the borrower defaults on the loan payment, the lender keeps the collateral and has the legal right to sell the property to try to recover their money. Additionally, they may still sue the borrower for any fees associated with the process and for money that is not recovered under the sale of the assets.

Another concern with the consolidation of credit card debt is the extended loan terms. Although the monthly payments can be significantly lower, the total amount paid over the course of the loan may be more than without consolidation. All options need to be weighed as the amount paid varies on a case by case basis. If you've run into some trouble with your credit card debt and need help, it's recommended you visit a debt advisor before undertaking a consolidation loan.

Avoid credit problems, collection calls, and the hassle creditors chasing you down every waking minute of each day! It's time to own up to your mistakes and your reckless spending sprees with your plastic money. The debt is there, and it's not going away until you take action and responsibility for it. The first step on the long road to financial recovery is going to start with your choice to consolidate your credit card debt.