Debt Consolidation

Got any good credit card offers lately? What sounds like a great deal in the promotion, may turn out to be a debt trap once you read the fine print. That’s assuming you actually read the fine print?

If not, maybe it’s time to start. These guidelines may help you make the best credit card choice:

1. Find out the interest rate. This is the obvious first step. Introductory rates can be anywhere from 0% to 18% (actually they call it 17.9%, but who are they kidding?). Your current credit score will be instrumental in determining how good the rate is that’s available to you. You want to start with the best possible rate you can get. But don’t stop there.

2. What could increase the interest rate? This can be anything from late payments to carrying a balance from one month to the next, etc. The introductory rate could go up at the drop of a hat. It’s your job to find out what the stipulations are and what the new interest rate would be.

3. Are there special reward benefits that would be important to you? These include anything like airline miles, hotel discounts, gasoline, groceries, etc. Make sure the rewards the card offers are ones that matter to you.

4. What are the fees you could be charged? Fees are usually hidden in the small print. They might be yearly fees, cash advance fees, balance transfer fees or processing fees. Look for a card with minimum to zero fees.

5. Balance the good points against the drawbacks. All offers have their good features out front – in the big bold print. You need to weigh the good ones against the bad features, which are usually hidden in the little fine print. Since the credit card debt traps are concealed in the small print, maybe it would be wise for you to read that first!

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Debt consolidation is an important decision. It’s especially important to realize that, although it might help you reach your goal of some immediate debt relief, it’s not going to solve all of your financial problems. By all means, check out all of the Internet ads and even look for some free consultations. But be clear that, in order to get long term debt relief, you’ll need to make some personal changes too.

To better understand what you’re looking for, here are some clarifications. You can find debt consolidation loans that are both secured and unsecured. It depends on your credit profile which kind you are qualified for.

A secured loan requires collateral. This kind of loan is usually based on a second mortgage on your home. However, occasionally you can get a secured loan using your car or some other personal asset. The bank requires this collateral to guarantee you’ll pay the loan back, because, if you default, you would lose your property.

Usually, you can get a much better deal with a secured loan. The bank will generally loan more money, offer better interest rates and lower payments, among other benefits. The main downside is that you would be putting a personal asset – more than likely, your home – at risk.

Unsecured debt consolidation loans are harder to get (especially if you have bad credit), you usually can’t borrow as much money and the loan will have a higher interest rate. This is because there’s no collateral. Of course, the benefit is that you probably wouldn’t lose your home if you should default.

There are other ways that you can consolidate debt using balance transfer credit cards. You would apply for a card with a low or 0% APR (annual percentage rate) and transfer your debt from higher interest rate credit cards to the new card. But this option is definitely not available to those with a poor credit score.

When you’re checking out your options for debt consolidation, be sure you get clear about every detail of the choices available to you. It’s only when you completely understand all the benefits and drawbacks that you can make the choice that’s best for you.

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If you’re in debt, don’t feel alone. Nearly everyone else in this country is too. For those who decide they don’t want to be in debt any more, I have some good pointers to help you turn your life around and become debt free. Here’s how I did it:

* I stopped spending so much money. This may seem like an unpleasant idea. But it’s not really that bad. I realized I had been bamboozled by TV to believe that, in order to be happy, I had to have a lot of things that I really didn’t need. When I looked carefully, I found I could do quite nicely with a lot less.

* I found a way to increase my income. There’s lots of opportunity out there for most everyone. My way to bring in more money was to start my own home business. I really enjoy what I’m doing, especially since I’m making a positive difference for other people. If you think it through, you can probably come up with some ways to bring in extra income that is both enjoyable and rewarding.

* I came up with a plan to pay off my entire debt. I decided I didn’t want to be in debt any more – it was just too stressful. Getting in debt is kind of an unconscious thing. So my first step was to start consciously planning what I was going to do to change my life. I got out pencil and paper, did the math and set some goals. I decided to pay off the credit card with the lowest balance first. Whatever strategy you come up with, it has to work for you.

* I found inexpensive ways to reward myself. It was really a surprise to me that I could enjoy my new simpler lifestyle. And I actually got off on eliminating debt. Each time I succeeded at paying off a card, I made a point of rewarding myself with some relaxing free time. Each success seemed like such an accomplishment that it was almost enough reward in itself.

* I made a decision to become debt free. I love having the freedom of a low overhead. It’s so much less stressful and that feels even better than spending money on stuff I don’t need. So, I decided the debt free life was the life for me. By being clear of all the benefits, you might find it’s the best lifestyle for you too.

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Can you still get a credit card? If so, Transferring your debt from credit cards with a high interest rate to a new card with a lower rate can be a good method of debt consolidation. This could also help both protect your credit score and get you out of debt. However, you have to watch out for extra costs hidden in the fine print.

Look for a new card with a low APR (annual percentage rate). If you can qualify for it and transfer your balance to the new card at no cost, it can save you money in several ways. First of all, you’ll save on interest charges. And secondly, you won’t have to pay a debt consolidation counselor. It might also give you time to pay your debt off or apply for another card to continue the balance transfer process.

There are many websites on the Internet offering debt consolidation counseling and help. And there are also sites comparing various companies that offer new credit cards with the pros and cons of each. For a good balance transfer card, watch out for the following things:

* How long would you have at a low or 0% APR? You’ll need enough time to pay off some of your debt or get another card to transfer onto.
Some cards offer the low APR trial-promotion rate for as long as one whole year.

* What kind of fees (if any) are charged for transferring balance onto the new card? It would naturally be preferable to get a card with no transfer costs.

*Are there any other “fine print” hidden charges? There are numerous “creative” ways credit card companies can charge fees. Be on the look out for issue, balance transfer and closing fees. But, don’t stop there – keep on carefully checking out the fine print.

The credit card companies are in competition for your business, so they keep offering new good deals. However, if they can trick you into paying hidden costs, they definitely will. Review the online websites that compare the differences and read the fine print. It’s up to you to find the best possible deal for you.

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When I got into debt I found a really great credit counselor. And what’s more it was free! That’s because it was volunteer counseling offered by my church.

Finding someone good is really important. And, it’s also essential that you find out how they’re going to make their money. Make sure it’s not at your expense. There are plenty of companies designed to help people, but there are also plenty only looking out for their own best interest. By all means, check with your church, or even churches in your area.

It’s also a good idea to check out all the offers on the Internet. Whether you find someone there or not, you will learn a lot about possibilities for yourself just by reading the ads. The promises they make may be grounded or not – but they can give you some good ideas for solving your own particular problems. You can also get referrals from Internet message boards.

If you decide to go with a debt consolidation company, they should be either insured or bonded or both. This will protect you in case the company goes out of business. You can’t be too careful when it comes to protecting yourself. So, be sure you do your research.

Find someone who offers the specific service you need – whether it’s just coming up with a good plan for you to pay it off your debt or it’s a complete debt management program. Try to find several different companies that offer free counseling sessions. This way you can interview counselors to get good ideas and you can choose the agency that would work best for you.

Pick an organization with an extensive range of services to give yourself enough choices. You never know what you might need. They should also be willing to work with all your creditors. Many counselors only work with creditors that pay them. Although some creditors won’t work with a debt consolidation company, the agent should be willing to work with them.

Some companies also like to take a “donation” for themselves out of each payment. Others absorb your entire first payment for themselves. You don’t want either of these options. Instead, make sure all the money you pay to the debt consolidation company goes to paying off your creditors.

And last of all, remember, getting in debt took time and getting out will take time too. It takes understanding and planning to do it right. That’s why you want to make sure you choose the best credit counselor or debt consolidation company.

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Debt sneaks up on you. Eventually you’re up to your eyebrows in more debt than you can handle. When you’re ready to do something about it, here are the tips I learned from my own experience of digging myself out from under a huge debt.

1. Stop spending money. Find areas where you can reduce the amount going out. If you can’t control yourself with credit cards, get out a pair of scissors and cut them up. Credit cards can be helpful in our complex world. But, when you’re addicted to spending, then having a credit card is like a junky with cocaine.

2. Simplify your current lifestyle. We’re constantly bombarded with spending temptations that start seeming like necessities. They’re not. You can be very happy and contented (possibly even more so) with less. Take a look at any place in your life where you can simplify and save money. Make a list, set priorities and eliminate the frills.

3. Increase your overall income. Once you stop spending and start simplifying, look at your bottom line. Is there enough money coming in to make more than the necessary minimum payments on your credit card bills? If the answer is “no”, then you’ll need to find ways to bring in more money. This could be anything from selling things on ebay to getting another job. Be creative and willing to do whatever it takes.

4. Create a good payment plan. Design your program in a way that allows you to achieve a sense of accomplishment ASAP. For instance, you could pay off the credit card with the lowest balance first. At the same time, you would only make minimum payments on your other cards. Another possibility is to pay off the card that has the highest interest rate.

5. Give yourself Rewards. Make paying off the debt your primary focus and then find free or cheap ways to reward yourself for each little accomplishment. You’ll definitely deserve it. And patting yourself on the back can help motivate you to stick with your new debt-relief program.

6. Set a goal to stay debt free. There’s a lot of satisfaction in being out of the debt. Hold that picture and experience the great relief it will give you. A debt free life cuts way down on stress and can pave the way to true financial freedom.

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Debt consolidation might solve your problem. But it’s not magic. And it may not be the right solution for you. Let’s take a look.

It works like this. For secured debt consolidation, you take out a loan that pays off all your creditors. Then you will only have one loan payment to make every month. Benefits, other than just having one monthly payment, include no more calls and letters from creditors.

The cost to you mainly depends on the interest rate you’ll be paying on the consolidation loan. If the interest is higher than what you’re paying on your current debt, it’s going to add up to more in the long run. While you’re checking out the numbers, find out how long it would take to pay off your debt, both with and without a consolidation loan. It’s essential that you clearly understand all of the pros and cons before making a decision.

And here’s something else to seriously consider. Can you really be trusted to not run up more indebtedness after you consolidate the debt you already have. If your consolidation loan is based on a second mortgage and you run up more debt, you could easily end up defaulting on your loan. That means you might lose your home. As you can see, this is not something to just jump into.

For those who have a problem overspending, a credit counselor might be necessary. You may need help finding ways to cut down on spending. A means to bring in extra income could also be necessary.

So, review all the details and think things through carefully before making any decision. If you have spending problems or your debts aren’t big enough to make consolidation viable, you may just need to change your habits and find a way to increase your income.

You can check out all the options on the Internet in the privacy of your own home and then sit down with pencil and paper to do the math. Also get clear about your own personal financial goals before you make a decision about what to do next.

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This has both good and bad aspects. Balance transfer credit cards can be a tremendous help in protecting your credit score and in getting you out of debt. But be extremely careful to watch out for the hidden costs. These are usually concealed in the fine print.

With the perfect credit card you would get a 0% APR (annual percentage rate) card and transfer your balance from a high percentage APR card to the new card at no cost. You would then have enough time to pay that card off or to apply for and transfer the balance to another card at no additional cost from either card.

If you look around carefully – there are websites that compare the advantages and disadvantages of different companies – you can find and take advantage of this good opportunity. These are the things you need to find out:

1. What is the trial period for the APR? (Preferably it’s 0%).

2. How long does this low APR promotional period last? Try to find one that will lasts until your balance will get paid off. Some can continue for as long as a year.

3. Are there fees for transferring balance to the new card? You should look for one that has no cost of transfer.

4. What other costs are hidden in the fine print? These might include issue fees, costs for transferring off the card onto another card or charges for closing the account within a certain time frame.

Be careful when playing this game with the credit card companies. They have experts designing their programs to try and make the most possible money off of you. Deceitful practices are common.

But, the good news is, credit card companies are competing ferociously for your business, so good opportunities are available. There are websites online that actually show company comparisons. Review them carefully and you could come out ahead in the balance transfer game.

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Debt sneaks up on you. Eventually you’re up to your eyebrows in more debt than you can handle. When you’re ready to do something about it, here are the tips I learned from my own experience of digging myself out from under a huge debt.

1. Stop spending money. Find areas where you can reduce the amount going out. If you can’t control yourself with credit cards, get out a pair of scissors and cut them up. Credit cards can be helpful in our complex world. But, when you’re addicted to spending, then having a credit card is like a junky with cocaine.

2. Simplify your current lifestyle. We’re constantly bombarded with spending temptations that start seeming like necessities. They’re not. You can be very happy and contented (possibly even more so) with less. Take a look at any place in your life where you can simplify and save money. Make a list, set priorities and eliminate the frills.

3. Increase your overall income. Once you stop spending and start simplifying, look at your bottom line. Is there enough money coming in to make more than the necessary minimum payments on your credit card bills? If the answer is “no”, then you’ll need to find ways to bring in more money. This could be anything from selling things on ebay to getting another job. Be creative and willing to do whatever it takes.

4. Create a good payment plan. Design your program in a way that allows you to achieve a sense of accomplishment ASAP. For instance, you could pay off the credit card with the lowest balance first. At the same time, you would only make minimum payments on your other cards. Another possibility is to pay off the card that has the highest interest rate.

5. Give yourself Rewards. Make paying off the debt your primary focus and then find free or cheap ways to reward yourself for each little accomplishment. You’ll definitely deserve it. And patting yourself on the back can help motivate you to stick with your new debt-relief program.

6. Set a goal to stay debt free. There’s a lot of satisfaction in being out of the debt. Hold that picture and experience the great relief it will give you. A debt free life cuts way down on stress and can pave the way to true financial freedom.

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Debt settlement is generally a legal matter. Consolidation or settlement may seem like a faster way out of debt. But, like anything else, there are pros and cons.

With consolidation, you’ll only have to make one payment, where you once had to make many. Consolidation and settlement can both also eliminate all those unpleasant creditor calls and letters. These two factors alone can definitely cut down on your stress.

Another benefit of consolidation could be a lower overall interest rate. This might enable you to make larger payments, which could help you get out of debt faster. Of course, if you’re having trouble making minimum payments, you’re not going to be able to pay more – even with a lower interest rate.

Since legal settlement involves attorneys, it can get expensive. But it’s usually a last resort when your only other option would be bankruptcy.

Debt consolidation could be costly too. This would mean that your loan would take longer to pay off. Some consolidation counselors can counteract this problem by negotiating a settlement for a lower total amount than what you owe. They can also sometimes get their payment from the credit card companies instead of you. You definitely want to find out how much of the cost would be coming out of your pocket before you decide which rout to take.

If you’re considering taking out a secured consolidation loan, remember, it would have to be based on something – probably a second mortgage on your home. That could be risky for someone in debt – to gamble with the roof over their head. If something should happen and you don’t have any savings to cover emergencies, you could lose your home.

When your debt is because your income doesn’t cover your expenses, then debt consolidation won’t do you any good. You may have to go for settlement.

Or you’ll either have to increase your income or reduce your expenses. Once you take one or both of these steps, debt consolidation can be an excellent support in helping you get out of debt. But, make sure you find a good program and a good company to work with.

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