Consolidation is simply the process of combining multiple debts into a monthly payment. Instead of making payments to all creditors, you turn all your debts into a simple repayment plan. This post, we will introduce everything about the credit card consolidation.
In the previous post, Info Credit Free introduces people to some of the necessary information that is useful for getting the best credit card offers in the US, to get more information people can read the article Ten best credit card offers in the US that people should know. Now, let find knowledge about the credit card consolidation in the post today.
CREDIT CARD CONSOLIDATION
Just like a lot of article posts such as instant approval credit cards, low-interest credit cards, pre-approved credit cards, best credit card offers…, this post about credit card consolidation also includes some main parts. They are:
1. What is credit card consolidation?
What is credit card consolidation? Consolidation is simply the process of combining multiple debts into a monthly payment. Instead of making payments to all creditors, you turn all your debts into a simple repayment plan.
It is all about streamlining. Basically, if you are currently making payments on some credit cards each month, you can combine them into one credit card with monthly payments.
In addition to making payments simpler, credit card consolidation can also help you take advantage of lower interest rates. Some credit card companies offer low referral rates for balance transfers, which can help you reduce monthly payments.
2. Three best option for the credit card consolidation
2.1. Work with a nonprofit credit counseling organization
Advantages: You can set up a program or debt management plan. This usually involves you making a single payment to a credit consulting firm, from which you pay each creditor. Sometimes, the organization may negotiate lower interest rates or make monthly payments on your behalf.
Disadvantages: There may be a small fee to set up as well as a monthly service fee. In addition, some of these companies will require you to close your credit card after you pay off your money, said Maggie Germano, founder of financial training services in Washington, DC. it’s always bad, but it can hurt your credit.
2.2. Take out a personal loan
Advantages: Interest rates may be lower than your credit card Interest rates and you may take several years to pay off your debt.
Disadvantages: Some lenders charge a source, which can make this an expensive option if you consolidate multiple debts. If you have poor credit, you may not be approved for saving money.
2.3. Use a balance transfer credit card
Advantage: If you transfer and repay the loan during the promotional period, you can avoid having to pay the interest completely.
Disadvantages: Some cards charge balance transfers, such as 3 percent or $ 5, on the amount you transfer. In addition, the combined amount and charge cannot usually exceed your credit limit, which may not be suitable for all your debts. Some lenders also do not allow you to use balance transfers to pay credit cards or loans from the same lender.
3. Some ways to choose the best credit card consolidation
3.1. Not all scenarios are created equal
It is important to answer a few simple questions to determine if credit card consolidation is right for you:
- How much debt do you have? Gather all credit card reports and add up the amount of debt you owe to creditors.
- How much can you really pay for monthly credit card payments? The goal is to pay off debts quickly, so check the amount you can afford to allocate monthly.
- How long does the introductory APR window last? The longer APR duration gives you more time to pay off your debt before the return rate is standard, and is often much higher, APR.
With these three factors, find out how much interest you can save in the APR window 0% compared to your current rate. Then, calculate the amount you will pay interest on the standard purchase rate on a new card over time you think it will take to pay the rest of the balance. Compare these numbers with what you will pay interest according to your current rate.
3.2. Balance transfers can impact your credit
Consolidating credit card and take advantage of low balance transfer offers that can increase your credit score. But to do this, it is important to follow a few suggestions. For example, for the general population, 30 percent of FICO credit scores are determined by the level of Islamic credit use, which is the amount of credit actually used.
In general, you should try to keep your credit card balance low. When you merge the cards you merge there will be a much lower credit usage rate, but your overall rate will stay the same. However, the lower interest rate you pay during a referral means you can pay more for your balance each month, helping to reduce your overall credit usage faster.
Also, you may want to avoid closing old accounts after merging. The account age usually contributes up to 15 percent of FICO Points, so closing an old account can reduce the overall age of your credit history. Just be sure to hide old cards somewhere safe to avoid adding more debt.
3.3. Check to see if a 0% APR applies only to balance transfers
0% referral APR is only applicable for balance transfer. Therefore, new purchases can be charged for standard APR – can be very high. Your cardholder agreement will indicate the APR for purchases and whether or not a referral rate applies.
Creating budgets and sticking to the budget will help make the most of credit card consolidation and pay balances faster.
3.4. 0% APR doesn’t mean FREE
Although 0% APR introduction is a great way to pay off credit card debt faster and save on interest payments, it’s not as free as most consumers think. Balance transfer fees are usually calculated, ranging from 2 to 5 percent for each transferred balance.
In most cases, despite the upfront costs, you will still enjoy significant long-term savings. However, it has something to consider when deciding if credit card consolidation suits you.
3.5. Not all credit counselors have your best interests in mind
If the customer is considering helping outside to resolve the debt, be sure to carefully review the credit advisor before choosing. The more non-profit, there is no guarantee that the services are free or legal. In fact, some non-profit credit counseling organizations charge very high. Signs of a prestigious organization include:
- Willing to send free information about their service without asking you to share any specific details about your situation.
- Licensed to provide services in your state
- Provides a wide range of services, from budget consulting to savings and debt management classes
- Certified and certified counselors
This post is about credit card consolidation. We provide this information to offer you some of the necessary information that is useful for getting the credit card consolidation. Also if you are looking for information about the credit card for a student, please refer to Somethings you should know about the best credit cards for students link we just provided in the previous article.
Hillary (Team Content) – Info Credit Free