Understanding Credit Card Debt Consolidation

Credit card debt can quickly build into a massive amount that seems impossible to overcome. Many people spend decades stuck in the cycle of amassing major debt on their credit cards and paying only the minimum amount required each month.

Unless you break free from this ongoing debt, you can find yourself locked into a lifetime of payments and interest. If you are already in this situation, you may want to take a moment to gain some understanding ofcredit card debt consolidation.

What is Credit Card Debt Consolidation?

With credit card debt consolidation, you combine all of your outstanding balances into one. As a result, you’ll make a single payment to one company each month, instead of dealing with each card payment separately. There are many benefits that can be enjoyed by the consolidation process, including:

• Credit card debt consolidation can give you a simple payment schedule to follow. 

• It helps reduce the amount of interest you pay each month. 

• Most importantly, debt consolidation of your credit card charges can help you get out of debt faster. 

Credit Card Debt Consolidation Options

You have choices for your method of credit card debt consolidation. The option you choose depends largely on what institution you are working with, how much you can afford to pay each month, and other issues unique to your case. Here are some of the options you have for consolidation.

Credit Card Debt Consolidation Loan

This is a popular form of debt consolidation. You simply take out a personal loan to cover the amount of your total credit card debt. With a loan like this, you instantly pay off all your previous credit card charges in a single payment. Then, you have only the monthly payments for the consolidation loan to consider. 

The best credit card debt consolidation loan can make your payment schedule simple while it gets you out of debt much quicker and saves you on interest payments. However, this is only if you can secure a low interest rate and get the debt paid off quickly. Be sure you can make monthly payments that are high enough to dissolve your debt fast. 

Credit Card Debt Consolidation through Balance Transfer Card

A balance transfer card offers you an alternative to a consolidation loan. This card lets you transfer your credit card debt to this single card. You will get a great promotional rate, as low as 0% for around sixteen months, allowing you focus your money on paying down your credit card debt instead of paying more interest. 

However, with a balance transfer card, the fantastically low interest rate will end after the promotional period. Plus, you may wind up paying a big transfer fee. 

Credit Card Consolidation through Your Home Equity

It is possible to use the value of your home to get money to pay off your credit card debt. In order to take advantage of this consolidation option, your home’s equity must be more than the amount of your mortgage balance. There are two ways to use your home equity for credit card consolidation.

1. Cash-out Refinance

This option allows you to refinance your mortgage and gives you up to 85% of the loan-to-value ratio to use for credit card consolidation. With cash-out refinance, you continue making your mortgage payments like normal. 

2. Home Equity Line of Credit 

A home equity line of credit (HELOC) also uses your home as collateral. However, instead off having to take all the money at once, you can take the money out over time. Generally, the period ranges from five to ten years for you to draw out the money. After that, you typically have from ten to twenty years to pay it back. 

Finding Qualified Credit Card Debt Consolidation Help

Before you decide on a plan for your debt consolidation, you need to make sure you are getting dependable credit card debt consolidation advice. An expert can quickly explain these and other options for your credit card debt consolidation.

With help from professionals, you can find the right option for your circumstances and get out of credit card debt once and for all. Your debt consolidation professional can make sure your program is realistic and successful, ending the cycle of credit card debt for good.