Bloomberg.com: Opinion::
Hello Rebate Check, Goodbye to Credit-Card Debt: John F. Wasik. Commentary by John F. Wasik Pay as much as you can every month to eliminate your debt.
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Can a debt consolidation loan eliminate your credit card debt? A consolidation loan might (or might not) be the key. There are several things you must consider when making the choice to consolidate debt using a debt consolidation loan.
First, is a debt consolidation loan your best choice to eliminate or substantially reduce your debt? There are other options available to you, including credit counseling and bankruptcy. Obviously bankruptcy is a last resort. You must examine several factors when making your decision on which debt reduction / elimination strategy to use. You need to get information on debt consolidation to make the correct decision.
â ¢How much outstanding debt do you have?
â ¢What is the interest rate of your current debt? Many credit cards have interest rates of 14% - 22%, depending upon your credit rating and payment history. Obviously, the higher your current average interest rate, the better off you will be if you consolidate your debt with a consolidation loan at a much lower rate.
Debt Help | Seeking Help with Debt | Experts on Credit::
Learn what you can do to lower or eliminate your debt by seeking outside use the proceeds from these loans to pay off your credit card debt in full.
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Credit Card Debt Settlement and Debt Negotiation::
DebtHelp.com offers information credit card debt settlement. within your budget, and will develop a timeline of when they expect to eliminate your debt.
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â ¢How much of your outstanding debt is unsecured? Unsecured debt has no collateral against it. Credit cards, student loans, store charge cards and medical bills are examples of unsecured debt. If you have over $7,500 in unsecured debt there a multitude of lenders that you can look at. Student loans fall into a different classification from other types of unsecured debt. In the United States, most are backed by the federal government. Usually you will have to use a secured debt consolidation loan to pay off your unsecured loans. You may also be able to refinance your secured debts, but you usually cannot consolidate secured debts.
â ¢Do you own a home or other substantial assets to use as collateral for a debt consolidation loan? If you own a home or other real estate, how much equity do you have in it?
â ¢What type of interest rate is available to you for a consolidation loan? The interest rate you receive on your loan is affected by a multitude of factors including the prime rate. For student loans, the borrower interest rate on consolidation loans is currently calculated as the weighted average of the interest rates in effect on the loans being consolidated, rounded up to the nearest one-eighth of 1 percent. They are capped at 8.25 percent.
Consider Debt Consolidation we can lower your monthly payments ::
So, eliminate your debt with our Debt Consolidation and Credit Counseling Program. With our debt management program, you will pay off your credit card
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â ¢How is your credit rating? Someone with a very good credit score, over 720 on the FICO scale or so, has options open to them that those with lesser credit ratings do not. If your FICO score is under 650, youll be in the sub-prime territory. Lenders have been backing away from these borrowers lately, but you still have options available to you.
Keep in mind that if you have more than 20% equity in your home, you are usually not required to carry private mortgage insurance (PMI). If you have reached the 20% equity stage through either paying down the principal, asset appreciation, or both, you can probably drop PMI and lower your payment. On the flip side, if you are not paying PMI and you take out a consolidation or other home equity loan, you may put yourself back under the 20% equity threshold. This would require you to get a new PMI policy. Factor this in when making your cost / benefit analysis.
If you are constantly slipping backward and your cash flow is poor, you can improve things with a debt consolidation loan. Be careful and weigh your options carefully. Take into account the tax benefits you may receive by using a home equity loan to consolidate your debt. This benefit will vary depending upon your tax rate. You can get many free quotes for debt consolidation loans.
There are several places that have multiple lenders compete for your business. Talk to several lenders to see which will give you the most favorable terms. You can substantially lower your monthly payment and significantly improve your cash flow situation with a debt consolidation loan. Just make sure this is the right choice for your needs.
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Eliminate your Credit Card Debt? How?