Credit card loan consolidation is something that you might be considering if you have Visa, American Express, Master Card, or any other credit card debt that is over 10,000. Credit card loan consolidation is where you borrow money that can help you to pay off all of your credit card debt at once. There are several pros and cons when looking into consolidation loans.
There are some pros when it comes to credit card loan consolidations.
- One great thing about consolidation is that the collection agencies will no longer be pestering you. An individual will receive no more phone calls at all hours of the day, from several different companies at a time.
- You will only have one debt. When you have more than one credit card you end up with more than on debt you need to pay on. By getting a consolidation loan, you will combine all the smaller debts into one single debt.
- A credit card loan consolidation will allow you to lower your monthly payments. This may seem strange because you are having a larger loan, but if you combine the entire little bill payments into one, the consolidation as a single payment is less.
The best way to understand this is through an example. If you were to have a debt of $15,000 with an annual percentage rate (APR) of 18%, for this particular debt a person will be looking at paying roughly $225 per month. However, if you were to obtain a secured loan (similar to a second mortgage) for the $15,000 that you are in debt. This secured loan should allow you to receive and APR as low as 2.79% for a 10-year period. This would allow you to have only one monthly payment around $114. This is about half of what you were paying previously. This price drop is something that is one of the biggest pros for someone looking into credit card loan consolidation.
As with anything, there are some negative points to a credit card loan consolidation.
- The biggest thing that can make you not interested in taking out a consolidation loan is the length of time that you are to be paying back this loan. The average secured loan can be obtained for anywhere from 10 to 30 years. Credit card debts may only take 3 to 4 years to pay off, which is significantly lower of a period.
- When you take out a credit card loan consolidation it is very important that you ensure not to gain anymore debt while paying off all your debts. If you put yourself into new debt you can potentially end up far worse off than you were before.
- Another downer to a credit card loan consolidation is the interest rates on the loans you try to obtain. Remember that you are in debt and that is a problem when trying to get a loan at all. It is important to remember that lenders prefer low risk individuals to offer loans to. This is one reason that a secure loan is the best option for low interest. However, without the collateral, you might be paying a higher interest rate. If you try to obtain
It is important to remember that a person cannot completely eliminate all of their debts. It can be helpful to work with a company the specialized in helping people to receive a credit card loan consolidation. Some debt settlement programs can help you to reduce and even remove the debt that you owe. This can be beneficial for those that are not sure of the best way to go about eliminating their debt. Some of these debt programs can help a person to remove their debts within 24 to 48 months.
Is it the Best Option?
Several things can help you determine if obtaining a loan consolidation is best for you.
This is a great option if a person is able to take out a secured loan. This means that you have something that is useable as collateral.
In order for an individual to gain the most benefit, they should have many high interest credit cards.
Nothing is all good or all bad. When comparing all the pros and cons of credit card loan consolidation you will see that overall it is a good solution. You want to evaluate your situation and make sure that it is the best option for you. Be sure that when committing to this loan you understand that is long term. It is also something that needs to be financially acceptable. Do not take on higher payments that you are able to afford. Over commitment can cause even more problems than not gaining help at all, be sure to only commit to what is actually doable.