Credit card debt is a type of debt that can very easily get out of hand. When you don’t pay with cash or see the money being debited from your bank account, it’s very easy to lose track of your spending. Once that monthly statement comes in, it can be a total shock.
Additionally, many card providers offer rewards, making it even more tempting to use. But with interest rates between 19 and 30 per cent, if you aren’t paying off the full balance every month, you may just find yourself drowning in debt.
If that’s the case, you may be wondering about your options.
Can I consolidate my credit card debt?
In a word, “yes,” you can consolidate your credit card debt. You can consolidate any type of unsecured debt – a type of debt where you don’t have a specific asset up against it as collateral. A car or house would be examples of secured debt.
When you consolidate, you typically take out one loan that wipes out two or more other debts. For example, if you have three credit cards with unpaid balances, you might choose to consolidate them into one debt with one payment and one interest rate. This action will usually reduce the amount of overall interest you are paying and make your financial situation a lot more organized.
Generally, if you want to consolidate credit card debt, you will either approach a bank or financial institution yourself or enlist the help of a credit counselling service that specializes in that sort of thing.
Benefits of consolidation
While credit card consolidation isn’t the right option for everyone, there are many benefits, including:
- Reduced interest payments
- No creditors harassing you
- One monthly payment rather than several
- Easier budgeting power
- Avoids bankruptcy & other unattractive options
- Organizes financial situation
How do you know if debt consolidation is right for you? If you have a large amount of debt with multiple creditors that will take you more than a year to pay off, it might be a good idea to look at debt consolidation. Additionally, you will need a high enough credit score to qualify for a lower interest rate, and cash flow that will cover your new monthly debt repayments. Keep in mind that you must stop using all credit cards once the debt is consolidated.
While debt consolidation can be an attractive option, it is not going to magically solve your financial problems unless you tackle underlying issues. A credit counselling service such as SolveYourDebts.com can provide you with the financial education you need to get your finances under control. With a little support, and some hard work, you can live a debt-free life and have the skills you need to manage your money, permanently.
Contact us today for a free consultation to discuss your credit card debt consolidation options.