| Credit card consolidation is the process of transferring | | | | A consolidation loan will not usually have a bad affect |
| all your credit card debt to one card with a lower | | | | on your credit rating, but be sure all the loan |
| interest rate. This process can help save you money | | | | procedures are explained to you before you get it. |
| on interest and finance charges, and ultimately help you | | | | Debt Reduction with Credit Card Consolidation |
| get out of debt sooner. | | | | If you're not interested in getting a credit consolidation |
| How's it Different from a Credit Consolidation Loan? | | | | loan, you can reduce your monthly credit card |
| A credit consolidation loan is a loan you get from a | | | | payments by consolidating all your balances to one |
| bank or other financial institution. You use this loan to | | | | low-interest card. |
| pay off other non-secured consumer loans and credit | | | | Credit card consolidation may also be the your only |
| cards. | | | | option to reduce credit card debt if you don't have the |
| These loans can be secured or unsecured. A secured | | | | assets to get a secured low-interest loan. |
| loan will provide you with a lower interest rate | | | | While low interest credit cards or cards with |
| because there's collateral, like a vehicle or house, that | | | | zero-interest introductory periods can help you |
| the financial institution can take from you if payment | | | | manage overwhelming credit card debt, they will not |
| isn't made. | | | | provide a magic solution to your debt problems. |
| There's some disagreement among financial advisors | | | | Chris Viale, general manager of Cambridge Credit |
| as to whether it's good practice to get a secured loan | | | | Corporation, a non-profit credit counseling agency in |
| to pay off credit card debt. If you have the assets to | | | | Agawam, Massachusetts warns about the dangers of |
| get a secure loan, then that choice is entirely up to you. | | | | these low interest or introductory zero-interest credit |
| Banks and financial institutions may be more | | | | cards. Viale points out that "you're getting symptomatic |
| comfortable giving you a lower interest credit | | | | relief, not a credit cure." |
| consolidation loan if they feel that their financial behinds | | | | According to Viale's statistics, 70% of Americans who |
| are covered in the event that you don't pay. | | | | use credit card consolidation (as a loan or credit card |
| Credit consolidation loans are not practical for | | | | balance transfer) to pay off their credit card debts end |
| everyone. They should only be used if you're having | | | | up with the same or higher debt loan within two years. |
| difficulty making your credit card payments through | | | | This is not to discourage you from getting a credit card |
| normal budgeting. They're a great way to reduce your | | | | with a great promotional offer. Most people find |
| debts, but in order to prevent further debt you'll need to | | | | themselves back in debt because of poor financial |
| completely change your spending habits. | | | | planning and unrealistic expectations and not because |
| Rates for credit consolidation loans vary. They will | | | | of the card itself. |
| ultimately cost you less money each month since you'll | | | | When you apply for any new credit card, do so with |
| be making one payment to one creditor instead of | | | | your eyes open. Companies that offer a zero-interest |
| several to numerous creditors. Try to get a fixed | | | | introductory period are only doing so to entice you to |
| interest rate so that your payments don't change. | | | | switch to their card. You will be required to pay interest |
| Some banks charge a small service fee to set up a | | | | on your balance sooner than you may want to. |
| consolidation loan. The same is true for any company | | | | These cards can work for you, but to make them |
| specializing in such loans. Be wary of a company that | | | | work you need to be disciplined. You'll need to stop |
| makes grandiose promises about permanently | | | | charging purchases to your credit card. It's also a good |
| reducing your debt. Also be cautious of companies | | | | idea to make double payments to make sure that |
| that charge you a consultation fee or large commission | | | | you're paying the principle. |
| to reduce your credit card debt. | | | | |