It happens to almost everyone at some point. One day everything is fine: the whole family is healthy, everyone is employed, and the bills are paid. Then something goes wrong. Someone becomes ill or loses a job. The family struggles along, trying to keep up with bills, until it becomes too much.
Credit cards and other debts can cause sleepless nights. Collection calls and letters begin to arrive with greater frequency. It seems like there?s no way out. However, credit card debt consolidation may be the perfect answer to this dilemma.
The first thing to do is to develop an understanding of your current credit card debt situation. Have a pencil and paper or computer ready to help you record some facts about your various credit card debts. Create a simple table using data like total balance, minimum payments, and interest rates. Add column totals to determine the exact size of your credit card debt and also figure out how much you are currently paying toward these debts on a monthly basis.
Next, decide what your ideal debt consolidation would look like. Choose an interest rate that is lower than any of the current rates on your credit cards. Also aim for a monthly payment amount that is less than the combined monthly total of your usual credit card payments.
Once you’ve determined the ideal figures, it’s time to find a credit card, financial institution loan, or debt consolidation company that can come close to those numbers. Many homeowners choose a second mortgage or home equity line of credit. These forms of debt consolidation use your home as collateral. Be careful before going this route. It can offer attractive monthly payments spread over a long period of time, but if you cannot make the payments, you may lose your home.
If you haven’t acquired a staggering amount of credit card debt it might be possible to consolidate by transferring your credit card balances onto another card. Some balance transfer offers charge no interest for the first six months or year, but again, be wary of fees associated with these transfers.
Debt consolidation companies negotiate with creditors on your behalf to lower monthly payments and interest rates. Typically, the consumer makes one monthly payment to the company, which is then distributed to creditors. Many of these programs charge a nominal fee for their services.
After choosing a plan that makes financial sense, stick with it. It will take time, but your credit card debt can become a thing of the past.