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Credit Card Debt? 3 Plus Truths About Debt Settlement and Debt Consolidation

Credit Card Debt? 3 Plus Truths About Debt Settlement and Debt Consolidation

Is it better to consolidate credit card debt yourself or seek the services of a debt consolidation company? Learn how to reduce your monthly debt payments.

Advantages of Debt Consolidation

The advantages? Debt consolidation firms argue that borrowing cash at a better interest rate than to pay debts off with your own credit card at a better interest rate can save you money over the long term, or save you money in the short term by helping you better manage your finances. Other advantages include: having fewer late payments, having more affordable monthly payments, and fewer chances that you will be late on a payment.

Disadvantages of Debt Consolidation

Does debt consolidation loans have disadvantages? Consolidation loans come with a variety of disadvantages. The main disadvantage is that the longer you go with high monthly payments, the greater your chance of defaulting. This can be a substantial loss to your credit score, which may affect future purchases. Consolidation loans are typically not meant to last forever because they often have an early pay out penalties.

can you consolidate credit card debt

How to Reduce Monthly Debt Payments

What are the best ways to lower your monthly payments while still paying off your debts?

  • Get a Debt Consolidation Loan

One of the best options is to get a debt consolidation loan from a debt settlement firm. Debt settlement firms can help

you settle your credit card debt for a fraction of the current amount owed. Because unsecured loans carry variable rates of interest, the amount that they settle for is also variable. It is a balancing act between satisfying the customer and getting enough money settled so as not to default. To do this, many firms will negotiate with creditors on behalf of their customers.

  • Bankruptcy Process

Another option is a bankruptcy process. A bankruptcy can wipe out a large portion of your debt relief potential but it is important to realize that this route is very time consuming and expensive. For most people, a much better way to get debt relief is to use the help of a debt settlement firm in a bankruptcy or debt relief plan rather than file for bankruptcy.

  • Refinance Your Mortgage

A third option is debt consolidation through a refinance of your mortgage. Many people cannot qualify for a refinance on their own. Banks usually require at least some equity to qualify. Using a refinance can lower your monthly payments but it can also increase your interest rate. It is best to find a mortgage broker to help you find a mortgage that offers the best deal.

You may also be able to lower your payments by working with your creditors. Some lenders offer incentive programs for people who can consolidate their credit card balances into one account. These programs are designed to help those with multiple accounts work with their lenders to lower their interest rates. This allows you to payoff all of your debts at once which will save you a lot of time and money. Most lenders will approve a debt consolidation loan, but they will charge a high interest rate as well.

  • Debt Management Plan

There are also companies that offer debt management plans to those who are unable or unwilling to consolidate. These plans allow you to transfer balances between several credit cards to a debt consolidation company that will pay them off for you. You can use the savings from the new company to make extra payments and lower your overall debt balance. This can reduce the stress of having to manage several debts but it can take several years to work through all of your accounts.

No matter what option you choose you should know that the best way to settle your current obligations is to contact your credit cards companies and negotiate a settlement. With each creditor you owe money, there is a process that must be followed to settle the account. It is best to hire an attorney so that they can give you the best advice possible. It may cost a little bit of money but the alternative to using debt settlement is bankruptcy and you do not want to ruin your credit rating or end up in jail.

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Posted by Mary Draper on

How To Use Credit Cards Efficiently During The Crisis?

Lock, Security, Credit Card, InfographicThe isolation that we are forced to respect to avoid the spread of Covid-19 has altered our day to day and, above all, our finances. Household income has been affected, while living expenses have been increasing.

Whether you’re out of work or on hiatus from the pandemic, a credit card can be a very useful tool for resolving emergencies. But how can we avoid getting out of control and ending up full of debt?

Here are some recommendations to keep in mind when buying with your credit cards during a crisis.

Check your cards

First of all, check which cards you are using and what they might be useful for in the midst of the crisis. Credit cards are a great tool right now and allow you to buy now and pay later what you need to survive and face any medical emergency that may arise. But, if possible, use the one that offers you the most benefits and dispense with the others. This way, you will avoid accumulating debt.

Buy the essentials

At this time, consumption should be limited to the most essential. Food and health care are priorities. We must only spend on food, medicines if we need them, and on our health service. Other types of expenses are totally unnecessary in these circumstances. In addition, we recommend that you fill your pantry and your refrigerator in advance and in a responsible way, so you will be prevented in case of shortages.

Make sure of your ability to cope with debt.

A credit card does not add more money to your income. What you buy with it you must pay sooner or later, so you must be sure of up how much you can pay monthly. The most advisable thing is that you do not spend more than 30% of your income. This way, you do not compromise the budget that you have destined for your basic expenses such as food, rent or utilities.

Ask for the interest rate.

Laptop, Credit Card, Infographic, 3DEither by phone or online, ask for the interest rate on your credit card, which in other words, is the cost of your credit. Since the amount, you must pay increases directly according to the interest rate. If you see that later on, it will be difficult to pay the debt, it is recommended that you look for a card that offers you a lower interest rate.

Use the card after the court date.

When you use the credit card after the cut-off date, you have approximately fifty days to pay. This date is assigned by the bank after adding all the expenses you had in the month. In this way, you can take advantage of all that time to save and pay in time.

Without a doubt, credit cards are a very useful alternative in these times of crisis and mandatory isolation. If you take into account these recommendations, especially planning what you are going to buy, pay your debts on time and know how much you are willing to pay, you can take advantage of the benefits that credit cards bring.

Posted by Mary Draper on

Eliminate Credit Card Debt With This Payment Plan

Credit Card EscapeAlthough my first formal job was as a credit card salesperson, and I knew exactly how they work, I quickly got caught up in them. I came to think that it was normal to have debts and that the only way to have something was to buy on credit.

Once we have recognized that we have a problem and decided to fix it, the next step is to know the exact financial condition we are in. For this, we must make a complete list of all the debts we have, both legal (signed in contracts) and honorable (loans to family and friends made with our word).

This list of debts must include all possible information, at least:

  • To whom is owed (name of institution)
  • The total amount owed from each
  • Minimum monthly payment
  • Annual interest rate
  • Contact person.

Create an action planCredit Card Escape

When we have the complete list of debts on paper, it is necessary to implement an action plan that allows you to take steps to get out of debt. This action plan is made up of no more debt. Otherwise, all other efforts will be useless.

Generate surpluses to be used for debt payment; some ways are:

  • Minimize expenses. The higher the commitments, the stricter you must be in spending money.
  • Increase income with secondary jobs, overtime, etc.
  • Sell ​​assets that can speed up our debt payment process.

Make the credit card debt payment plan as follows:

  • The list of debts order it from the lowest debt to the highest
  • Negotiate with creditors to have the lowest monthly payments.
  • Pay the monthly minimum of all debts and the surplus we have generated and pay it to the smallest debt.
  • By paying off the smallest debt in full, we add what we paid to the next smallest debt.
  • So on until all debts are paid in full.
  • When you finish paying all the debts, the money used to pay debts must now go to savings.

Once you have managed to pay all your credit card debts, you must promise not to acquire another debt. That simple promise will make you live a debt-free life, which is no small thing today.