Credit Card Debt Consolidation

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Credit or plastic card debts usually come up when a customer of a finance company buys goods and services from merchants on credit through the card system. When this action takes place a debt has been established against the client in favor of the company. The debt normally falls due in 30 to 45 days’ time or even less. And if the debtor does not clear the debt as at when due, it accumulates through interest and penalties the company will charge on the outstanding owed by the consumer. Whatever consolidation plan you are going to adopt, make a plan that will not allow you to get into debt again.

By Austin Okonji

The ownership of a plastic-card for finance purposes usually starts as a privilege extended to a consumer by a card company. But without being financially responsible, clients can easily find themselves in terrible financial problems when the debts accumulate because of a lack of repayment by the borrower. People may be finding themselves in serious credit card difficulties probably because of the ease with which the credit is usually obtained. It is not really supposed to be that way, rather the system should be there to ease the financial burden until someone is financially buoyant.

Paying back debts is usually not a sweet experience for the majority of debtors, be it a student loan, mortgage, or whatever type of loan. Sometimes it becomes very difficult for payments that are due to made thereby leading to defaults which if it continues will hurt the credit rating of the consumers thereby leading to financial problems with the card company. That is why everybody that is groaning under debt is very eager to come out it in the shortest possible time. When the burden is becoming too much to bear and finances are becoming leaner, the borrower will start considering consolidation.

A consumer who had owed more than one finance company can decide to put the various debts together. Instead of paying back to several firms each month, he or she can now make one back payment every month with more likely lower finance cost and less stress.

What are the methods you can use to manage your adverse financial situation when you have been deep into multiple debts with more than one company?  The first to consider is known as credit card refinancing, you simply need to get a new credit card and transfer all old balances into this new card. They often do not charge you interest during the promotional period. You will need good credit scores and may be asked to pay some small management fee of about 3 percent of the balance transferred. The use of personal loans is another method of consolidating your various financial obligations, simply obtain such loans and use them in paying off your debts.

Those earlier methods we have discussed work better for those with good financial standing, but what if your standing is bad? You will need the services of a non-profit agency to help you out. This may involve a debt management plan, you pay the agency monthly and they will negotiate and pay the credit card companies on your behalf. They may be able to obtain better interest rates for your debt repayments with their skill. Other loans involving your home also come in handy when you want to consolidate your debts. Apply and obtain the loan with your house as collateral and use it to pay off your loans. It may offer you low-interest payments but if you default, you can lose your home.

Some people do ask whether consolidating their debts into one payment can hurt their credit score. If you take the loan and pay as agreed, can actually help your credit score and even ease budgeting, but there are some risks also.

If you can change that bad habit that led you into debt in the first instance, and repay your consolidated debt in time, and all the times they fall due, you will experience a positive effect with the arrangement.

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