Many consumers are not able to manage their credit card debt and often look for help. They say that an estimated 95% of consumers max out or come close to their credit limit in the first 45 days of activating their credit cards. Since more than 9 out of 10 consumers are doing this, it's probably best to consider credit card debt consolidation as a means to repay the debt. With these facts on credit card debt, it's becoming more and more apparent that consumers are not being responsible when it comes to their debt. Credit consolidation is also referred to as debt management or even sometimes credit counseling. When looking for credit card debt help regarding these options, it's extremely important to understand how the these programs differ from one another. Credit card consolidation works by using a third party company to contact the creditors in an attempt to lower the minimum payments, interest rates. By using a third party provider, consumers are often able to get better interest rates and have their minimum payments reduced as opposed to going to the creditors directly. Most companies that offer credit card debt consolidation are often non profit debt consolidation companies. Regardless of the tax status of the company though, either for profit or nonprofit companies can often get much better terms compared to what the consumer can do by themselves.
The consolidation programs in summary, help consumers reduce minimum payments and high interest rates. It allows consumers to consolidate credit card debt into one monthly payment. So given the consumer had to many monthly bills, the consolidation program would do just that. In addition, it doesn't require any form of collateral such as a home or any other form of physical property, unlike the consolidation loan. This program works only to reduce minimum payments and the annual percentage rates and since that's all it does, the consumer's credit score will go undamaged when entering the program. Unlike most debt relief programs, credit card consolidation will keep the consumer current with their debt. When looking for help with credit card debt regarding credit consolidation, these debt consolidation programs are by far the most popular solution.
Top 3 credit card consolidation tips
Here we will address three tips on how to further benefit from credit card consolidation. Many consumers think that the program in its self can just help them become debt free. Although this is true, consumers can further benefit from the program by using these 3 tips.
Tip 1: Stop the monthly protection plans
The creditors tend to offer credit card protection plans, which we feel are just additional revenue streams for creditors to further capitalize off the consumers. These monthly protection plans will talk about the protection of missed payments and your credit rating, but this is not necessary inside or outside of the program. These protection plans must be stopped, as the monthly fees for these can range from $10 to $99 monthly. If you add up this fee you can see how after a year it can easily eat up a lot of your minimum payments.
Tip 2: Shred the credit cards from further use
Shredding the credit cards is common sense and must be done. As the balances start to go down, the last thing a consumer would want is to have virtual fake money lying around the house in the form of credit cards. By having these credit cards, consumers will often be tempted to use them. Whether its for everyday expenses or even the holidays, credit cards provide consumers with a false sense of having money that simply does not exist. Stay away from these credit cards and shred them from further use.
Tip 3: Try to double the minimum payments
Although credit card debt consolidation reduces the minimum payments, it's important to understand that credit cards should be paid off in full each month. When this cannot be done, it's important to apply more to the minimum payments to further capitalize off the benefits of this consolidation program. Remember, the interest rates in the these consolidation programs will be reduced dramatically. To further capitalize on this, try applying more than the minimum payment each month.
How to do credit card consolidation on your own
Consolidating your own debt can be beneficial, if done right. However, you're more likely to get better interest rates and minimum payments if you go through a third party provider. The best way to do credit card consolidation on your own, is by transferring all your credit card balances onto a card with the lowest possible interest rate. If any interest rate is above ten percent, give up and contact a company. But by doing this, the consumer will have one monthly payment as opposed to several. It's important to pay off that card as quickly as possible before the interest rate increases. When trying to find ways on how to consolidate debt on your own, it can be done given you pursue these instructions.
For consumers who find it too difficult to do it yourself; the credit card debt consolidation program can be administered by a debt relief company. That company will often contact the creditors to have all interest rates reduced. The consumer would only have one monthly payment, which is usually a godsend for consumers whom have too many monthly bills. It's never recommended to contact the creditors yourself by using the counseling number on your actual statements though. These counseling numbers are usually only temporary solutions and will often put a negative mark on your credit score.
How credit card consolidation can help you with your debt
If you're looking to reduce the amount you pay out each month, then these credit consolidation programs can easily assist in having the interest rates and minimum payments reduced. Calling the creditors to request a lower minimum payment, will often not work. These creditors have a set requirement as to what they can go down to on the minimum payments with consumers. By using a company, you would have more leverage and those high minimum payments your making will indeed be reduced to something more affordable.
Another reason on how credit card debt consolidation can help you with your debt, is by reducing the total amount paid in interest. They say that the average consumer who has revolving credit card debt, has an interest rate of at least 19% or higher. By reducing the interest rates, consumers will be able to have more of an impact on the balances they owe when they make the minimum payments each month. Reducing the interest rates is a must when looking for credit card debt relief. By having these lower interest rates, the repayment period will be reduced dramatically.
Finally, another popular benefit on how this program can help you with your debt is by combining all your monthly bills into one payment. Dealing with multiple bills can drive any consumer to the point of insanity. They say the average consumer has around seven different credit cards, so making all these monthly payments can be confusing and extremely time consuming to say the least. By enrolling into these consolidation programs, consumers will only have to worry about one monthly payment each month of which he or she can setup according to their financial situation.
Additional information on credit card consolidation
Credit cards are nothing more than a psychological game played against consumers. Creditors tend to offer gold or platinum cards with an endless credit limit, on a zero percent introductory rate for 6 months or so. These offers are what attract consumers into using the credit cards to begin with. To avoid this all together and to find additional ways to benefit from credit consolidation to ensure its not a scam, it's important to limit you're spending. By reducing the amount you spend, you may be able to understand your budget and remove luxuries from your life which may be why you even have credit cards to begin with. It's important to understand what the necessities are needed in your life and to remove the expendables which are not necessary for everyday life. By doing this, you may be able to limit your spending and dependency on credit card debt altogether.
Consumers can find additional ways to benefit from these credit card debt consolidation programs by finding ways to double or triple the minimum payments. It's never recommended to pay just the bare minimum. When consumers find ways to increase their monthly income or find ways to reduce expenses to pay more than the minimum required, they can often further benefit from these credit consolidation programs ten fold. Regardless, when searching for your credit card consolidation options, it's never a good idea to consider a debt consolidation loan. The loans offered by banks do not have the best interest of the consumer and will only worsen your situation.
Learn how credit card debt consolidation is actually provided
These programs are often administered by non-profit organizations. For-profit organizations often provide these types of services, it's usually best to go through their reputable factors to ensure your not being over charged. When going through, the management is limited on how much money they can actually make. Because of this, greed doesn't factor into your monthly payment when doing credit card consolidation. It's important that you learn how credit card debt consolidation is actually provided prior to ever enrolling into one of these programs.