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Consolidating your Credit Card Debt

Apr 6, 2008
Credit card debt is a growing national problem. Companies are reporting that over 50 percent of credit card accounts are 90 days or more past due. Many Americans are finding they have overextended spending with credit cards and struggling to reduce the debt. Credit card consolidation programs provide a mean of resolving the debt in a more affordable manner.

The goals of credit consolidation programs are to combine the credit card debts and generate one affordable monthly payment. In most cases, this debt can be paid off in just a few years (about 3-6 years in most cases). Consolidation often qualifies for lower interest rates based on the amount of the combined debt.

Research options available will ensure that the new loan will not cost much or more than the individual loan payments combined. There are non-reputable companies that avoid giving the best rates. It is important to know your options before making a decision. Avoid signing any documentation during emotional moments. Calculate the current payments makes for ease in comparing proposed consolidation payment amounts and allow you to determine which offers the best option.

Once a consolidation loan program has been chosen, payments need to be made as scheduled. A single payment is made on the consolidation provider and the provider of the consolidation will pay the creditors on your behalf. These payments must be made on time!

Late payments will put consolidation loan status in jeopardy and creditors may resume collection activities. This can also result in an increase in the loan interest rate. Frequent communication with the assigned credit counselor (or "consolidation specialist") is vital so that problems or changes can be addressed quickly. This will prevent the account from being returned to collections for payment.

While it is the consolidation program which will make the loan payments, reviewing monthly statements for accuracy is your responsibility. A reduced interest rate should be reflected in the statements and the account should no longer accrue late fees or other charges. If there are inaccuracies and incorrect payment amounts, contact the assigned counselor so these issues can be addressed. This will ensure that the company is paying creditors the correct amount and avoid future problems.

Debt consolidation loan programs vary. Choosing the right one depends on the individual situation. Each case is unique. Some programs have higher payments over short periods of time while others offer lower payments over several years. Let common sense prevail. Look for the loan with a monthly payment that is affordable.

Some companies offer a fixed interest rate and disallow principal payments, which can reduce the loan more quickly. Look for a loan consolidation program that will allow you to pay more when you can!
About the Author
Want to know more about loan consolidation? Go and visit www.allaboutloanconsolidation.com and learn about Credit Card Counselling , unsecured loan consolidation and other related information.
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