Key to Credit Card Debt Consolidation Methods

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Chicago, IL (prHWY.com) March 2, 2012 - There comes a time when credit card debt simply becomes overwhelming. Sometimes the minimum payments are too high for the household budget. Other times, credit card companies may raise interest rates just enough to make it no longer viable to keep a certain card. On still other occasions, new financial obligations might arise making it simply impossible to make those payments while paying off a handful of credit cards. When any of these things happen, many consumers find that the best way out is to consolidate credit card debt into one manageable line of credit.

Credit card debt consolidation offers consumers a way to save money and pay off debt faster. They can consolidate all credit cards into a single loan, erasing that debt with one convenient provider to send payments to. There are a two primary ways to consolidate debt. Balance transfers and home equity loans both offer a way to manage debt and each has its own pros and cons.

Balance Transfers

An easy way to consolidate credit cards and the debt that comes with them is through balance transfers. Credit card offers arrive in the mail constantly and even more can be found online. Consumers can shop around for the highest lines of credit with the lowest rates and then use these new cards to pay off the old ones. This can be a very effective method to pay off balances faster, especially if the new credit card has a low, and maybe even 0%, introductory rate. The downside here is that a balance transfer takes discipline. Consumers must remember how they got into trouble in the first place and resist the temptation to use their new card for purchases. If this sounds too difficult, perhaps a home equity loan is a better option.

Home Equity Loans

The second key method to consolidate debt is through a home equity loan. Homeowners can borrow against equity and use that amount to pay off their credit card debt. The big advantage here is that since this is secured debt backed by collateral, the interest rate will be considerably lower than that of the former credit cards, which were unsecured. The collateral aspect also factors into the negative, however. Consumers who partake in home equity loans to pay credit card debt must be dedicated to paying all loan bills on time and in full. Failure to do so can result in home foreclosure. Even so, home equity loans, like balance transfers, are an excellent method to consolidate credit card debt and pay off credit cards once and for all.

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Tag Words: legal, law, finance, business, debt

Categories: Finance

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