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    Methods and Benefits of Credit Card Debt Consolidation


    Credit card consolidation is a methodology wherein multiple credit card balances can subsequently combine into one balance. This enhances tracking making it easier because there is usually just one monthly payment and due date. Consolidation strategies frequently come with a lower annual percentage rate that will save on total interest paid, authorizing you to pay off the balance quicker.

    Methods of Credit Card Consolidation

    An individual can consolidate credit card debt using numerous methods, but the most popular are as follows:

    Personal loans,

    To consolidate one’s credit card debts one must contact their bank or credit union and request a personal loan. The application process is a tedious process that can often be completed over the phone or online most times.  Flexible terms (typically 12 to 60 months) and establish a consistent month-to-month payment, that assists in budgeting. There is a chance some financial institutions will pay creditors directly, saving one the hassle. Be aware when it comes to interest rates that are likely determined by the term of the loan as well as the credit score. Loans may also be subject to origination fees, adding to the overall cost of the loan. Often, the essential four metrics used in lending are income, credit score, total assets, and total debts.

    Debt consolidation programs,

    A debt consolidation program is customarily a service for borrowers wherein the credit cards are combined into a single payment. With this, they usually make a single payment to the program that would subsequently forward the payment to the creditors. One must not discombobulate this with a debt consolidation loan, which grants to pay off the existing debts. Existing debts are still there but now may be more manageable.

    Ideally, the program’s monthly payment is less per month than making all the payments leading to more of the payment that goes toward paying down certain debts. Debt consolidation programs often work with creditors to help reduce interest rates on debts and eliminate varying fees such as late fees, though neither is promised. Some debt consolidation programs may require the closure of some or all of the cards you’re consolidating, so double-check if your goal is to keep your cards.

    The easiest and reasonably priced, 0% introductory APR (annual percentage rate) offers from certain balance transfer credit cards

    Many credit cards offer an introductory offer of 0% APR (annual percentage rate) on balance transfers for a limited time after opening the card. While they may still be subject to balance transfer fees (typically within the range of 3% to 5% of the balance being consolidated), they often offer 0% introductory periods between 12 and 18 months to avoid any worrying about the balance being caused by any additional interest.

    Peer-to-Peer Lending

    This is another way to access funds for a consolidation loan. The idea is to create a “win-win” situation, bringing together those seeking loans with those who are willing to invest. The borrowing to consolidate debts into one easy monthly payment and an investor who readily seeks a steady as well as worthwhile return on investment.

    Why Credit Card Debt Consolidation is a Good Idea?

    The purpose of credit card debt consolidation often is to roll an individual’s high-interest credit card debts into one easy payment with a lower interest rate. If else, it is offering a clear path to getting debt-free as the terms tend to have a fixed paydown period. This makes it more structured what a person needs to be on their way to being debt-free, even if there are some setup or origination fees.

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