FollowDo-It-Yourself Credit Card Debt Consolidation
Image via Wikipedia
When the economy was still fit as a fiddle and life was a bed of roses, credit card companies were the consumers’ best friend. But as the economy went downhill, the roses became nails in the form of unemployment, a pile of unpaid financial obligations, including credit card debt, collection letters and harassing collection calls from creditors. As if the other financial obligations are not enough, dealing with credit card collectors can be a pain. The deck of plastic cards that used to make purchases a breeze now has become a burden. If you have more than three credit cards, it may be about time that you take the multi-headed bull by the horns and do something about it. I’m talking about credit card debt consolidation. And yes, you can do it on your own without hiring a counselor.
Why Credit Card Debt Consolidation?
With mortgage payments, car loan payments, utility bills, possibly medical bills or college tuition, and other personal loans in your financial plate, juggling multiple credit card debts can just add to the strain to the already stressful situation. If you are in this debt pit, credit card debt consolidation may be of help. Given the right arrangements, consolidating your credit card debt does not just make your life easier, it can also lead you to paying off your credit card debt over time.
The Most Important Thing to Look for in a Credit Card Debt Consolidation
When consolidating credit card debt, make sure that you are getting a lower interest rate versus the current average rate of your credit card accounts.There is no point in consolidating credit card debts if you cannot negotiate a lower rate. The consolidation may make paying physically convenient because you now only have one single bill to pay instead of the multiple bills to juggle, however, financially, it will obviously make paying more difficult.
How to Go About Credit Card Debt Consolidation
1. Summarize the important details of each of your credit card accounts by tabulating them. The columns should include:
- Credit Card Company
- Outstanding Balance
- Minimum Amount Due
- Due Date
- Status (whether in default or paid on time)
- Interest Rate
- Other Charges (e.g. Late charge)
2. Compute for the average interest that you are paying for your credit cards. This is an important detail when consolidating.
3. Based on your income and expenses, calculate how much you can comfortably afford to spare to pay for credit card debt per month. You will need this when negotiating with creditors.
4.Contact your creditors, let them know of your financial difficulties and try to ask for a lower rate and a more affordable payment scheme. If they do, ask if you can possibly transfer your other credit card balances to this account. If they do not allow you a lower rate or to shift the other balances, don’t worry; you still have other options.
5. Scout for other creditors that offer lower interest rates and accept balance transfers. Make the average interest rate you have computed in Step2 as your ceiling; your new rate must be lower than this amount. Make sure to check the period of validity of the new affordable rate as there are many credit card companies that offer introductory zero or low rate, but after a few months, the rate will increase. When this happens, make sure that you have already paid the debt in full or if not, be sure to find another creditor with a lower rate to refinance.
6. If you want a relatively low interest rate, you can also opt to get a home equity loan and use the financing to pay off your credit card debt. Interest rate is lower because you use your home to secure the loan. So make sure that you do not default in paying this loan because you can end up being homeless.
Credit card debt consolidation can be done by any consumer. All it takes is some analysis of your credit card accounts and overall finances, a dash of negotiation skills and the tenacity to seek for a lower interest rate.
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Image via WikipediaWhen the economy was still fit as a fiddle and life was a bed of roses, credit card companies were the consumers’ best friend. But as the economy went downhill, the roses became nails in the form of unemployment, a pile of unpaid financial obligations, including credit card debt, collection letters and harassing collection calls from creditors. As if the other financial obligations are not enough, dealing with credit card collectors can be a pain. The deck of plastic cards that used to make purchases a breeze now has become a burden. If you have more than three credit cards, it may be about time that you take the multi-headed bull by the horns and do something about it. I’m talking about credit card debt consolidation. And yes, you can do it on your own without hiring a counselor.
Why Credit Card Debt Consolidation?
With mortgage payments, car loan payments, utility bills, possibly medical bills or college tuition, and other personal loans in your financial plate, juggling multiple credit card debts can just add to the strain to the already stressful situation. If you are in this debt pit, credit card debt consolidation may be of help. Given the right arrangements, consolidating your credit card debt does not just make your life easier, it can also lead you to paying off your credit card debt over time.
The Most Important Thing to Look for in a Credit Card Debt Consolidation
When consolidating credit card debt, make sure that you are getting a lower interest rate versus the current average rate of your credit card accounts.There is no point in consolidating credit card debts if you cannot negotiate a lower rate. The consolidation may make paying physically convenient because you now only have one single bill to pay instead of the multiple bills to juggle, however, financially, it will obviously make paying more difficult.
How to Go About Credit Card Debt Consolidation
1. Summarize the important details of each of your credit card accounts by tabulating them. The columns should include:
Credit Card Company
Outstanding Balance
Minimum Amount Due
Due Date
Status (whether in default or paid on time)
Interest Rate
Other Charges (e.g. Late charge)
2. Compute for the average interest that you are paying for your credit cards. This is an important detail when consolidating.
3. Based on your income and expenses, calculate how much you can comfortably afford to spare to pay for credit card debt per month. You will need this when negotiating with creditors.
4.Contact your creditors, let them know of your financial difficulties and try to ask for a lower rate and a more affordable payment scheme. If they do, ask if you can possibly transfer your other credit card balances to this account. If they do not allow you a lower rate or to shift the other balances, don’t worry; you still have other options.
5. Scout for other creditors that offer lower interest rates and accept balance transfers. Make the average interest rate you have computed in Step2 as your ceiling; your new rate must be lower than this amount. Make sure to check the period of validity of the new affordable rate as there are many credit card companies that offer introductory zero or low rate, but after a few months, the rate will increase. When this happens, make sure that you have already paid the debt in full or if not, be sure to find another creditor with a lower rate to refinance.
6. If you want a relatively low interest rate, you can also opt to get a home equity loan and use the financing to pay off your credit card debt. Interest rate is lower because you use your home to secure the loan. So make sure that you do not default in paying this loan because you can end up being homeless.
Credit card debt consolidation can be done by any consumer. All it takes is some analysis of your credit card accounts and overall finances, a dash of negotiation skills and the tenacity to seek for a lower interest rate.
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