The average interest rate on a card is over 13 percent as well and rising. Thanks to the new bankruptcy laws banks are now able to charge interest rates of 25 percent, 30 percent, and much more. There are several advantages to a consolidation loan.
Benefits of a Credit Card Consolidation
If you are a homeowner and choose to go with a secured loan your interest rates are usually lower. Since credit card debt consolidation loans often carry lower interest rates, your monthly payments may be as well. You will also just need to make one payment to one creditor. Take note that although your monthly payment could be lower, the duration of your loan is often longer.
Balance Transfers are not the same as Debt Consolidation
Balance transfers are not a permanent solution. Sometimes a lower APR is only a temporary introductory rate. Frequently balance transfers are subject to fees that are either a percentage of the amount transferred or a particular dollar charge. Balance transfers are simple and convenient but only amount to transferring your credit card debt around. You are still subject to late fees, higher interest, and over the limit fees should you charge up the balance on your card.
If you are a homeowner one option is to refinance your first or second mortgage and use the additional money to pay off your high interest rate credit card accounts. A first mortgage is generally refinanced at a lower rate of interest than a second that is generally a home equity line of credit HELOC or a home equity loan. An important thing to consider is that converts your unsecured credit card debt into secured debt. This allows for a lower interest rate that comes at a cost. You may collateralize the new bonded debt from your house in most cases.
Finding a Card Debt Consolidation Loan
An excellent way to discover a credit card consolidation is to look online. Just type credit card debt consolidation loan into Google or your favourite search engine. Lots of the consolidate debt loan providers will let you apply online for quicker approval. If you are a homeowner looking for a mortgage refinance you can consider any of the significant brokerages or contact your regional mortgage broker too.
Also check with family or friends for a recommendation, they might have done the research for you. Ultimately you will need to change your spending habits. Should you take out a Loan and run up large balances on your credit cards then you will be in a worse financial situation then when you began. Consider your financial goals and discipline level then determine whether a credit card debt consolidation loan is suitable for you.