Consolidating credit card debt good idea

” In this post we’ll help you answer that question by explaining how a debt consolidation loan works, what the alternatives are, and describing when debt consolidation can help you and when it will not. You need all the information in order to make the best decision, so that you can turn your finances around as quickly and painlessly as possible. It’s a loan that allows you to pay off your current debts with a new loan that has different terms (usually from a different lender) than your current loans or credit cards.

The reason this can be helpful to people with a lot of debt is that it can solve three of the worst problems you face: 1) High interest rates Some types of debt (particularly credit cards) can have extremely high interest rates – up to 25% or more.

The option that best suits you depends on your overall debt load, credit score and history, available cash and other aspects of your financial situation, as well as your self-discipline.

Consolidation works best when your ultimate goal is to become debt-free.

From a monetary sense, this strategy may make the most sense, as it will cut out you spending so much on interest.

To implement this, you simply boost your payments on that card up to whatever you can afford and stick with it.

Consolidate Your Debt Now Debt consolidation is combining several unsecured debts — credit cards, medical bills, personal loans, payday loans, etc. Instead of having to write checks to 5–10 creditors every month, you consolidate bills into one payment, and write one check.

This helps eliminate mistakes that result in penalties like incorrect amount or late payments.

A consolidation loan can sometimes lower your monthly payment, and that can give you enough breathing room to get back on track.

3) Confusion because of too many bills Another common obstacle to getting out of debt is when the sheer number of bills you receive makes it hard to even keep track of which payment is due on which date. While there are some real benefits to debt consolidation, it’s extremely important that you do your homework and understand there’s a wide range of options when it comes to debt consolidation loans – some are good, some are bad, and some are downright predatory.

Whichever one has the highest annual percentage rate (APR), that’s the one that gets the focus of being paid off first (while still making minimum payments on your other cards, of course).

Once that card is entirely paid off, you move on to the one that has the next highest APR, and so on.

Consolidation can help with this problem by reducing the number of bills you get down to a single one. Check your rate using Ready For Zero's free debt consolidation tool.

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