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http://webtaj.com Debt Consolidation & Management : What Is the Best Way to Consolidate Credit Card Loans?
Got credit card woes? Got more than three credit card bills coming in a month, and not anywhere near enough money to pay even one of them off every month? Do yourself a big favor, and deal with the situation. The sooner you do, the better your options will be. By a lot.
Who Needs Credit Card Consolidation
Credit card consolidation is the best way out for that small portion (about 15%) of Americans who use more than 50% of their available credit. We're also the same group who tends to hold six or more credit cards each. We're probably also the "one" of the one in six families that pay only the minimum payment per month. Our average total credit card balances? $ 10,000 or more.
We're the ones that throw the national average off, because actually the majority of US households have no credit card debt. No credit card debt? None? Yeah, that surprised me, too.
That factoid that the average American owes $ 8,000 or more in credit card debt actually made me feel better when I first heard it. But the distasteful fact is that according to the Federal Reserve about 25% of US households don't even have credit cards, and another 30% more pay them off every month.So that little voice in the back of your head that says "everybody does this" every time you charge something? Its a lie. Only about one in seven people get into trouble with credit cards.
OK. Enough of the beating yourself up. You'll just feel hopeless and might charge something else to escape the pain.
Instead, let's talk about solving the problem. If you're a member of the 15% club (like me), you have probably already realized that it is a significant problem.
What is the solution - the real solution - to your credit card debt? On the surface, it was obvious: Stop charging more than you pay off every month.
If only that was true.
You may have come to that conclusion well over a year ago, and you, like me, may have actually stopped charging things on your credit cards. Bravo. You may be well on the road to credit card recovery because you haven't used those evil little plastic tokens in a year or more.And yet, you're not.
You're still paying them off, aren't you? Me too. And their interest rates have probably climbed to obscene, irrational levels like 30% a year. Even the "good" ones, at 16%, are crippling your finances. Even though you pay more than the minimum payment every month, you are still in roughly the same spot you were all those months ago when you stopped using them.
Its darn unfair, isn't it?
Enter credit card consolidation. You take all those monthly credit card bills (and hopefully the reasonable credit history you've been earning by paying them every month) and roll them into one loan.
Again, if only it were so easy. Before you roll into the first credit card consolidation loan that comes along, be sure it
1) Has a lower interest than what you're paying now.
2) Is not a variable interest loan, but a fixed interest loan. If you can't get anything but a variable interest loan, at least know the terms backwards and forwards, and be fully confident you can meet them.
3) Is going to improve your finances enough that you can actually save money, so you never need to use credit cards again.
For us folks in the unhappy 15%, debit cards and cash are the way to go. You can do everything but rent a car with a debit card, and if you have a $ 3,000-$ 5,000 balance backing the debt card up, you can rent the car, too.
You can consolidate your credit card debt in several ways, including rolling them into one credit card (preferably one of those zero interest deals), getting an unsecured bank loan, or (if you own your home) getting a new mortgage or a home equity loan or a home equity line of credit.
If you have whole life insurance, you can even borrow against that. If you've managed to save some money into your 401(k), you may be able to access that as well. Just be real sure you do your homework and learn how to spot credit card consolidation loan scams, because they are out there.
But don't get too miserable, or too afraid of those credit card bills. If you're brave enough to be reading this article, you're already on your way out of the 15% club.
Find More Credit Card Debt Consolidation TopicsQuestion by K.C.: Debt Consolidation Loan for my auto loan?? How it could effect credit? Pls read? So when I first got my car I had bad credit and my interest rate is a whooping 16% ... this was in 2006 .. Ive never been late on the loan (fyi) so I rec'd a mail offer from Discover Bank whom I have a Discover credit card with and I apllied and was approved ... my loan with Discover is for $ 9,500 which is what my payoff of my auto loan is ... my question is will my "paying off" my auto loan and having new credit that is my Discover loan effect my credit drastically .... I know its just moving the debt but my interest is now 12% with Discover @smiling there are no otehr fees ... no annual fee, no application fee, no prepayment fees, etc @Joshua and any one else lemme say its a loan with Discover not a credit card ... I already have a credit card with them ... sorry for any confusion @sarahsmile90 its not an auto loan its just a loan period ... debt consolidation loan -- thank you for ur input Best answer for Debt Consolidation Loan for my auto loan?? How it could effect credit? Pls read?:
Answer by Smiling
No, it shouldn't change your credit score at all. What are the charges associated with this loan. Make sure that you actually end up saving money and not just paying the 4% difference another way.
Answer by Joshua
The only issue you will have is the amount you are putting on the credit card. If you only have a $ 9500 limit on the card and that is what you are going to charge you will be maxed out. If you are using more than around 30% of the available credit on a revolving credit line, your credit score could be impacted. I would also see what your payments will be on a credit card for a $ 9500 balance versus what your payments are right now on an installment loan. It could be drastically higher.
Answer by sarahsmile90
Congratulations on the lower interest rate, I wasn't aware that Discover even gave auto loans. Just make sure your previous auto loan shows that you have paid it off on your credit report. This should have no negative affect as you paid in a timely manner and the loan is paid off, keep paying on time and your credit score will only benefit.
Answer by rennickelizabe
if the rate is low i would go for it and i don't think it would affect your credit
Answer by Sasquatch
You could actually improve your credit rating if you continue to make your payments on time. Remember that the other loan is going to be shown as paid in a timely manner. The question I have is concerning the offer from Discover. Most credit card offers give you a rate for so many months and then default to a much higher rate. This doesn't have to be a problem since you can either pay off the loan before the interest skyrockets or you can find another loan at a low rate before the deadline on Discover. You can find a ton of information on this subject at www.debt-or-freedom.com. If you don't see what you need try one of the advertisers on those pages.
Answer by Car_Finder
This quite confusing, just want to clarify so meaning you are having 2 loans as of the moment?
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