First, many have credit cards. However, few manage them properly. Statistics from many sources prove this. But do you need a credit card consolidation?
Valuepenguin.com reports credit card debts are shocking!
- 38.1% have credit card debts
- Average American household debt is $5,700
- Overall, revolving debt is $929 billion
- Total U.S. Debt is $3.4 trillion
There are many reasons behind this credit card debt report. However, if you manage your credit card responsively, the problem is solved.
If you are concerned about credit card debts, get the right solution to avoid major financial damage. Such as credit denial and bankruptcy.
Credit card consolidation is one of the best ways to pay off multiple credit card debt.
You might be curious about how it works. So please, allow me to explain.
Understanding credit card consolidation method
Through the credit card consolidation process you can pay off debts with a lower interest rate.
You can consolidate your credit card debts in 3 ways. Enrolling in a credit card consolidation program. By taking out a consolidation loan. Also, through balance transfer.
Credit card consolidation program
You can consolidate your credit card debts through a debt relief company. So by enrolling in a credit card consolidation program. The company will take care of certain things. Such as: negotiating with your creditors, lowering the interest rates, providing professional guidance, and tackling collection calls. But the best part is you’ll be able to pay off the debt in full at a lower interest rate.
Taking out a credit card consolidation loan
To start, opt for a personal loan from a financial institution. These have a lower interest rate to pay your credit card debts faster. Finally, you need to make only one monthly payment.
Balance transfer method
If you have more than one credit card debt, then consider the balance transfer method. This allows transferring high-interest credit card debts to a low-interest rate credit card. However, make sure you pay off the balance within the period. Because after the interest rate goes up.
How does credit consolidation affect your credit score?
Some people think consolidation process makes it even worse. So you may not find immediate credit improvement. However, credit card consolidation helps rebuild credit.
- If you enroll in a credit card consolidation program to get an affordable monthly payment. After paying your bills you find positive listings on your credit report. But be regular on your current monthly payments.
- Obtaining a credit consolidation loan to pay off debts increases your credit score. When paying off debts with a consolidation loan, your report will reflect your initiative on paying off the defaulted accounts. So if you remain consistent making payments your credit score will improve.
- Your credit score can go up if you obtain a new credit card. Because you can transfer your high-interest debts. Be timely on the new credit card. Also don’t miss a single payment and pay off the balance in full.
- After paying off the total outstanding bills, your account will be updated as “Paid in full”. The phrase indicates you have paid the outstanding balance. Thus, your credit score may get a boost.
Credit Card Consolidation ditch multiple debts!
Finally, credit card consolidation can be a perfect way to erase debts. But make sure you have good income to make monthly payments. So if you’re not sure how much income is required consult with a financial adviser. Thank you for reading and I hope you enjoyed this guest post.