Credit Card Consolidation
If you're plagued by high interest debt because your credit cards have gotten out of control, you might want to think about credit card debt consolidation loans that could lower your monthly payments and help you pay down your debt. It's important, though, to be careful when considering this type of debt reduction. Much of the time, credit consolidation companies will promise you lower rates and lower payments, but all that's really delivered on is the promise of a single monthly payment.
So, what do you need to know if you're thinking about credit card debt consolidation? There are a few things to keep in mind.
It's Not a Cure All
If you want to get out of debt, good for you. But sometimes, credit card debt consolidation is like slapping a Band Aid on a gaping wound. Often, people who consolidate their debt end up in worse shape years down the road, because they don't change the behavior that caused them to get into debt in the first place. They consolidate their credit card debt into one loan, and then when they feel the need for a little extra buying power, they apply for more credit cards, and max them out.
This happens because people don't change their behavior. Debt consolidation, for a lot of people, is like overweight people taking diet pills. Sure, it helps in the short term, but if you don't change your eating habits, you're going to pile all the weight back on in the long term.
Credit card debt consolidation loans can be a very useful tool when it comes to managing out-of-control credit cards. But over the long term, it's only going to work if you can make the lifestyle changes that will prevent you from falling back into debt.
Don't Rely on Consolidation Services
There are thousands of credit card debt consolidation companies in Orange County, California, but the fact is that they want a lot of money. Often, it's in up-front fees or processing fees if you're funneling their payments through them. They can end up costing you a lot of money, and most of the time they're not really doing anything for you that you couldn't do for yourself.
Do your research, and look at credit card debt consolidation options in Orange County, California. You could, for instance, take out a home equity loan, get an unsecured line of credit, or even move your existing credit card balances onto another credit card that offers a lower rate, or even no interest, over the short term.
It's simple - when you cut out the middle man, that's someone you don't have to pay. So before you consider paying money to credit card debt consolidation companies, try to find ways of fixing the problem on your own.
Don't End Up Paying More
Often, with credit card debt consolidation companies, you can get a lower monthly payment, but you end up paying considerably more over the term of the loan. Granted, if you're to the point where you can't even afford bus fare, you're going to be tempted by lower monthly payments, looking for the short term fix. A better solution might be to try to pay your cards down one by one, starting with the ones that carry the higher rates.
Protect Your Home
You could consider a home equity loan, a line of credit against your home, or a mortgage refinance as a means of debt consolidation, but you have to keep in mind that if you do this, and you default on your payments, you could lose your home. These options can be very tempting - mortgage rates of 3.5%, for example, look a lot more attractive than credit card rates of 16% or more. Do it if you have to, but if there's a workable alternative, don't.
The Final Word
You can get out from under credit card debt, but be careful. Don't choose the easiest fix, or the one that costs you the least. Consider all your options carefully.