Credit card debt is a nightmare! If you are suffering from high interest rates that are crippling you it is high time to consider consolidating your credit card debt before things get too bad. By consolidating your credit card debt you will roll all your debt into one much more manageable payment that will be at a much lower interest rate and therefore reducing your payment.
You have four options to consider when you are looking at consolidation; each suits a different set of circumstances:
Home Equity Loan:
A home equity loan is a loan that is offset against the value of your home and is also referred to as a second mortgage. This loan can be used to pay off all outstanding debt, not just credit card debt leaving you with a single monthly payment.
The advantages of these types of loan are that they have the lowest interest rate of any loan, making your monthly repayment very low in comparison to what you were paying; and, even in t hese times of economic hardship, they are relatively easy to be approved for.
The downside is that if you are unable to make the full payment each month your home is in danger of foreclosure.
Unsecured Loans:
Unsecured loans for the purpose of debt consolidation are widely available. The interest rates are much lower than those experienced with credit cards although not as low as the rates applied to a home equity loan.
The advantages of this type of loan are a lower interest rate and if you should be forced to file for an unforeseen bankruptcy at a later date it can also be discharged unlike a home equity loan.
The disadvantage is that although these loans are widely available they are much more difficult to be approved for, especially during these tough economic times.
Credit Card Balance Transfers:
If you have several high interest credit cards it maybe advantageous to transfer them all to a card that applies a much lower interest rate. Although not the best way to consolidate your debt it will however, reduce your monthly payments considerably.
The advantages of a consolidating credit card are the management of your credit card debt will become easier and your payments reduced.
The unfortunate thing with this method is that its success depends on your ability to change the way you use your credit cards; also, you will need to get rid of the cards you have paid off therefore avoiding the temptation to use them again and getting deeper into trouble as a result.
Debt Consolidation Companies:
If you have no collateral or are rejected at every turn for a loan and your credit card status is that bad that you are unable to get a card with an interest rate low enough to make transferring balances worthwhile; then looking at debt consolidation companies is your last option.
These companies will basically take on the roll of mediator with your creditors, negotiating better terms and reduced rates w ith them. Once negotiations are over and agreements are made you will pay them a set amount each month which they will then distribute amongst your creditors.
The benefits of using these companies are that you will no longer need to deal directly with your creditors and the management of your debt is handed over, reducing stress and anxiety.
The negatives are that because you have relinquished control of your finances to one of these companies it is very difficult to know exactly what s happening with your debt. Also there are many of these companies that are out to scam you by charging you too much for their services meaning that your debt takes even longer to clear and your monthly payments come down very little.
It is better to stick with government affiliated nonprofit companies than companies that are not recorded by the better business bureau, no matter what kind of deal they are offering.
For more information about credit card consolidation and other debt consolidation information, visit creditcardconsolidationloanssite.com
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