If you happen to possess multiple credit cards, you are likely to end up struggling to make your credit card debt payments. In such a circumstance, consolidating your credit card debt might serve helpful by allowing you lower the monthly payments you will have to make as well as to reduce the rate of interest associated with your debt. However, when you get your monthly payments reduced, it is obvious that the term period of the loan increases and so does the interest rate payments.
Therefore, it is important that you first analyze various factors before deciding about whether or not to consolidate your credit card debt.
Credit card debt consolidation typically means integrating all your existing credit card debts into a single loan with bad credit, by which you will end up making only a single monthly loan payment to your creditors. This can be done either on your own, by directly taking out a debt consolidation loan, or by seeking the guidance of a reputed debt management or consolidation firm.
While there are many articles that discuss about the good sides of a debt consolidation loan, this article focuses on how to prevent you from falling into the trap of credit card debt consolidation. Given below are some key tips you should follow:
- Perform a calculation on all your credit cards and the rates of interest associated with them, and arrive at a conclusion about the period of time it would take for you to pay all your credit card debts off, if you keep following your present payment rate. Now, compare this period with the overall term of the credit card consolidation loan you are about to obtain. You will come to know that even an average period of a consolidation loan, even with a lower interest rate, ends up costing you more money over the long run.
- Next, check the amount of money you will be required to pay on a monthly basis for the credit card consolidation loan you would take out. See if your current monthly payments equals to this amount. If the monthly payment of the consolidation loan looks to be higher than your current payments, then you should probably consider making additional payments or add more money to your monthly credit card debt payments. If the amount is vice versa, then the period of the loan would be longer, making you pay additional interest charges over the term of the loan.
Despite these two flaws, if you are facing overwhelming credit card debt payments that you no longer can manage, then the only best choice for you would be to seek the help of a debt consolidation company, as you will not be able to negotiate with your credit card company about lowering the interest rates charged on your credit cards.
A credit card debt consolidation loans no credit check, when integrated with credit counseling and a good debt repayment plan, can prove to be fruitful, enabling you to pay off all your credit card debts quicker than usual, after which you can enjoy your life debt-free.