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Credit Card Debit Consolidation

Jul 22, 2008
First things first - cut up all your credit cards. You'll never get out of debit if you keep spending money you don't have. And that's really what this is about, isn't it? Setting a budget and living by it. Don't get a debit consolidation loan just to go into more debit that you can't pay. It's a viscous circle, and you don't want to be caught up in it. Bottom line - don't even think about debit consolidation for your credit cards unless you're ready to change your spending habits and live on a budget.

Controlling Credit Card Debit
When you use credit cards, you are borrowing money. And borrowing money means you're paying interest on it. There's no such thing as a free lunch, right? Well, mostly. There are some lunches in the debit repayment world that are free - for a time. If you have a credit card debit with high interest rates, think about trying to find a zero percent interest card that you can transfer it to, and make sure the fees are low or non existent. This is the easiest form of debit consolidation that you can pursue, and it's probably one of the most effective. Eliminating the interest that you're paying on a credit card makes the payment that you are making that much more effectively. Think about it - a credit card at 10% interest (and that's fairly low) with a $10,000 balance costs you almost $100 a month. If you transfer the balance onto a zero percent interest promotional card, you're buying yourself another $100 per month. Multiply that by two or three cards, and you're talking real money. It's debit consolidation at its best.

Using your HELOC for Debit Consolidation
This is only something you should pursue if you're willing to change your spending habits for good - and I mean you're absolutely dedicated to it. Using your home equity line of credit as a debit consolidation loan can save you some significant money, but also put you at significant risk. What you're doing is transferring unsecured, high-interest debit into a lower interest, secured debit. This is known as securitization. Remember, when you do this you're agreeing to sell the asset that you have secured your debit with in the event that you can't repay the debit. In the case of debit consolidation with your HELOC, that means your house! You can see where this can get very, very dangerous. Think about it - it shouldn't taken lightly.

Debit Consolidation Companies
This is a company that SHOULD help you negotiate with your lenders for lower rates, principle relief, and repayment plans. I say should, because they don't always do so. Look for a lender that will work with you on a plan that you're comfortable with. Don't be afraid to ask questions, and make sure you understand everything that's going on before you commit to any courses of action.
About the Author
Allen Wright is a freelance writer who covers all topics that catch his interest. Get more information on debit consolidation here.
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