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Credit Card Debt Consolidation


When faced with overwhelming credit card debt, it is important to know the available options to get your finances back on track. One of these is credit card debt consolidation.


There are two ways to consolidate credit card debt. One is to obtain a credit card debt consolidation loan from a bank or other financial institution. The benefit to paying off your credit card debt with a bank loan is that the interest rate will usually be lower than your credit card interest, saving you money. Also, because the loan will be an installment loan, there will be an end in sight to your payments. Some people also experience peace of mind making a single payment each month as opposed to paying numerous credit cards.


The other type of credit card consolidation is available to those who have a lower-interest credit card to which to transfer the higher-interest debt. This is a particularly good choice if your card has a 0 percent introductory rate and you can pay off the balance during that introductory period. This also can save a significant sum of money in interest and help to pay the debt off faster as well.

Both of these methods of consolidation should help to salvage your credit, as long as the payments on the loan or consolidated credit card are paid on time.


There are drawbacks to consolidation as well, however. Credit card debt is unsecured. This means the debt is not tied or attached to any asset. Banks are not generally eager to give loans to pay off unsecured debt. Thus, some debtors will not qualify for a bank loan for credit card consolidation. Likewise, if you do not already have a 0 percent or lower-interest credit card, and if your credit is not exceptionally good, such a card may be impossible to obtain, especially if you have already fallen behind on credit card payments. Additionally, circumstances may place some individuals in the position of being unable to afford even a reduced payment on a loan or low interest credit card.


If credit card debt consolidation is not a viable option for you, for whatever the reason, bankruptcy may be the answer. Bankruptcy is designed to give debtors a fresh start, and unsecured credit card debt is one type of debt that may be discharged by filing for bank