Deciding The Best Choice For Your Situation
Debt Consolidation has become more popular recently with many people choosing to reduce their credit card debt to one payment. If you have a several credit card bills and are having trouble making the payments, debt consolidation is one option, among several you should consider, to pay down your debt.
It is nothing new to be stuck with several credit cards with high interest rates. If the monthly payments are becoming more difficult to pay and you feel as if the hole you are in is getting deeper and deeper you are not alone. There are several options you may consider but do your homework to find out which one is right for you. Let’s look at the different options available when considering consolidation.
First, if you are a home owner you can access the equity by taking out a home equity line of credit, or loan, to consolidate the debt. If you have kept up with your bills to this point and you have a good credit rating, meaning the FICO score is 700 or more, your chances of obtaining a home equity loan are very good.
The second option to consider is obtaining a loan from your bank. Again, this will depend upon your credit history. The amount and interest rate that your can negotiate will mainly be determined by your credit score.
Third, you can call each credit card company and renegotiate the interest rates. I have done this successfully and many companies are very willing to assist you and to keep your account current.
Last, and yes, very least (and this is the ultimate last resort), if you have a credit card that is offering a very low interest rate, and if the interest rate will be set for more than a year, then you can use that card to pay off the high interest rate credit cards and just have one credit card bill to contend with. This is a big tramp unless you are relentless with managing your money. Lets face it, you probably wouldn’t be in the situation if that were the case. Use this option only as a last resort.
If none of these options are applicable, the best advice most experts offer is to seek credit counseling with a certified organization. This can help you reduce the interest rates, and perhaps work out a repayment plan with these companies to give you some breathing room.
I tend to prefer to recommend you negotiate your own debt. The reason I favor this is because of the success I had in doing this. I negotiated my own personal debt 66% less than if I were to file bankruptcy. If you want to see if this would work for you click here to find out more.
The real overwhelming key to successful debt consolidation is that once you have paid off the majority of credit cards, it is incumbent upon you to cut up those cards (except one that should be kept for emergencies) and vow never to apply for new credit cards or begin using the ones you have paid. Anything less becomes an exercise in futility.
Some people may be able to ask a family member to cosign for a loan. If your credit is not considered the best, you will need a cosigner for a loan. Most people are reluctant to do this, however, depending on your situation, many family members are more than willing to help out when the know you are in a tough situation.
Keep in mind that if you take out a home equity loan the value of your home has probably declined recently so it may serve you well to apply for a loan from your bank instead.
Debt consolidation can work. Consider that if you apply for a loan, the monthly payments will always be the same. The interest rate given at the outset will largely depend on your credit standing. But the clear advantage is that there is only one bill to pay each month over a period of time.
