Credit Card Debt – Should You Consolidate Debt?
You’ve been spending too much money on your credit card debt. After a job loss, medical emergency or other emergency it’s hard to make ends meet combined with the new credit card debt bills. The situation is getting desperate.
One way to improve your life is to consolidate credit card debt into one monthly payment.
Credit card consolidation is closely related to refinancing. However, unlike refinancing your debts generally do not require a new loan. Consolidating credit is accomplished by “taking out” your credit card debt with another debt consolidation loan. Convenient monthly payments are made on the debt consolidation loan. Your previous credit card debt accounts are paid off and then your new loan is paid back, and you’re left with one monthly payment and a lower interest rate on the new loan. It’s a win-win situation for both you and your credit card debt company.
The most important aspect of refinancing your debt is to find a credit card consolidation loan that will still fit your needs with reasonable interest payments. Look for a program that provides free advice and Recommendation. Make sure the consultant carefully reviews your financial situation and gives you the information you need to make an informed decision about refinancing your credit-card debt. Consider the following factors when selecting a credit-card consolidation program:
1. Is the Credit Counseling Company affiliated with a national body such as the CFTC (Commodity Futures Trading Commission)? You now must be doubly careful because any false claims can be easily denied and or made against the firm you are dealing with. A 30 day notice will be given before closing your case.
2. What is the Annual Percentage Rate? Interest rates may vary from one company to the next usually. One offering the lowest rate may not be the best one. Whichever interest rate the credit counselor sets for you must be written in the agreement. It is highly suggested that the APR is presented to you at the start of counseling. If that not provided, consider taking another loan.
3. The services and the cost. It does not matter how long it takes to pay off your credit card debts, but take your time. Find a company that is willing to work with you and owes you the same as yourself. This may take longer than your first plan, so take action in reducing the time that is needed.
4. Are the Creditors open to Bargaining on the interest rates? It may be possible to say that one credit card company is offering your payment terms, but keep in mind these are still easier for you to deal with then are lower than all your cards together. Do not be afraid to negotiate on monthly payment terms, just remember that they said “lowered” in their agreement so that is how they would like it to appear. Also, after you have paid off a certain amount of the total amount owed on one card, if you wish, you might want to offer unto the charges on another card on the grounds the second creditor will see no need to raise your payments and you can pay off sooner but that of course depends on your situation.
Overall, credit-card consolidation is a sensible way to get back on track for yourself, reduces the stress you may be experiencing because of any eggs in one basket, and can improve your credit rating.
Prepaid Debit Cards
With the marketplace in turmoil, many financial institutions are looking for ways to footprint their competition. Providing consumers with a simple and convenient method for funding their purchases, some companies are offering debit cards. These cards look and act just like any other credit card and can be used at millions of places. However, there has been some confusion over the pros and cons of these cards.
Prepaid debit cards are not technically a credit card, but work like one when you’re shopping. Just like a credit card, a prepaid debit card offers temporary credit so you can buy online, pay for car rental, or book airline tickets. You’ll not be vulnerable to interest charges or finance charges. Instead, the money you spend will only land up on your card after you’ve exhausted the funds you put on the card upfront. If your card’s balance is low, you’ll only be spending a small amount of cash or your order may even be discounted. You can plan and budget appropriately because the money you put on your prepaid debit card will be user- repayable when your funds are replenished. Unlike a traditional credit card, the amount you put on your prepaid debit card will be immediately deducted from your account balance when they are used. This way, there are no bills to worry about or late fees!
One disadvantage with a prepaid debit card is that you do not build a record with a bureau to help you establish credit. You cannot open any banking or line of credit and, unlike a traditional credit account, you cannot use your card as a method of payment. However, since you won’t be experiencing late fees or over-the-limit charges, you can rebuild, or re-establish credit. If you have lost your original card, an equally troublesome problem exists. You’ll simply need another prepaid debit card, but with an even more difficult formula for determining your creditworthiness. If you can’t find an existing account with no blemish on your credit report, chances are you’ll be unable to create a credit record. The optimal solution will depend on finding an card with no excessive fees, no excessive monthly minimums, and a program that makes it easy for you to improve your credit rating. Building the best record possible will take time and patience.
When you’ve decided that a prepaid debit card is right for you, it is important to fully understand the fee structure. You will find that there is no shortage of debit card companies competing for custom, and each one will try to lure you in with a various number of fees. However, most offers a one-time start up fee price and no more if you are running a second card. Needless to say, a prepaid debit card with no extra costs is a great option for low-income individuals. They will appreciate that the card does not require a minimum balance or an approval process, and they can’t do without one if they need more urgently.
The next tip is to determine what balance will work best for your needs. All debit cards work much like cash, and you’ll access a specified amount as soon as your funds are deposited. However, the amount will vary according to the company. You will find that it varies anywhere from $1 to $300. See what works best for your stressful budget so that you canClosingDebit Card processingfor you.