Credit card consolidation is a unique strategy that has helped millions of Americans take control of their debt.
By combining multiple credit card balances into one low interest loan, consumers can pay off their debt faster. Unfortunately many Americans are unable to pay more than the minimum payment on their credit cards. This can turn into a never ending cycle where consumers are struggling to keep up with their monthly bills.
For many American consumers a consolidation loan can provide the relief they need to pay off their debt. By taking out personal loans to pay off their outstanding debt it is possible to reduce monthly payments on credit cards. While credit card consolidation sounds simple, there are many things consumers need to keep in mind before jumping into the process.
Review the following before consolidating:
- Benefits of Debt Consolidation
- Where to Get Help with Consolidation
- Getting Approved for Consolidation Financing
Benefits of Credit Card Consolidation
Credit card consolidation offers many benefits to consumers looking for debt relief. One of the primary advantages is that by consolidating debt into a single loan individuals can lower their interest rate. The reduced interest rate can usually help reduce a borrowers monthly payment enough to help them pay off their debt.
Also by taking advantage of consolidation, a borrower can extend their repayment period. A longer loan term will help reduce their monthly payment. Smart consumers can take advantage of this situation by using the lower minimum payment to begin paying extra each month to be applied directly to the principle.
Advantages of Consolidating Credit Card Debt:
- Lower Interest Rate
- Fewer Creditors
- Extended Repayment Period
- Lower Monthly Payments
- Can Be Completed without a Credit Counselor
Where to Get Help with Debt Consolidation
Contrary to popular belief, debt consolidation can be handled without the help of a credit counselor. Many debt relief agencies advertise aggressively in order to take advantage of uneducated consumers with credit card debt.
A simple debt consolidation loan can be found at peer to peer lending sites and online lenders at low interest rates. This loan is used to repay all outstanding credit card debt in one lump sum. Then the previous credit card payments are used to pay off the new debt consolidation loan.
Peer to peer lending sites make it extremely easy to apply for personal loans online. Most of the borrowers that get approved for financing use the loan to consolidate credit card debt. The entire process can be handled online and loan payments can be automated by connecting an eligible checking account.
Getting Approved for Credit Card Consolidation Financing
When applying for loans online, borrowers can follow a few steps to improve their chances of getting approved. Borrowers with good to excellent credit often get the best interest rates on unsecured financing. However, due to high credit card debt borrowers looking for a consolidation loan may not meet this criteria.
Fortunately there are options available for bad credit debt consolidation loans.
Before applying for any type of loan borrowers are advised to review their credit report for errors. Since lenders look closely at a borrowers credit history this step should not be skipped. Any errors that are made by creditors on a credit report can be fixed but it is up to the consumer to take the steps to find a solution to the problem. Often times errors can be corrected with a quick phone call or letter to the creditor.
Borrowers must continue to aggressively pay off credit card debt before starting the consolidation process. Lenders will give favorable loan terms to motivated borrowers that have a consistent history of paying off debts on time. Also by paying down debt as much as possible before getting a new loan borrowers will receive the benefits in the form of lower interest charges.
Consumers can take their first step towards eliminating debt completely by applying for a debt consolidation loan from a peer to peer lending site. They offer the best interest rates and excellent customer service.