In the era of credit card debt in your life it is important to tackle it to the earliest. One best way is to look into a credit card consolidation loan. It’s a good option if the bills are too high. If not, there is another option too. You can pay your small debt on your own. Let’s learn about both the options and what are their pros and cons as well.
Credit Card Consolidation Loan
If you are one with overwhelming credit card debt, a credit card consolidation loan will surely help in tackling the huge debt. The lender will combine all the unsecured debt into monthly payment system by entering into a new loan agreement of paying back. It will charge lower interest rate compared to what you have been paying to all the other creditors. However, there are some pros as well as cons too and those are as below:
It comes with lower interest rate or lower monthly payments.
Pay off existing debt instantly and pay only one bill every month.
Some of the consolidation companies ask for up-front fees for the services offered, but it is suggested to be away from such lenders and look for those who do not assess fees initially.
Educate yourself about the new loan and know it is better in getting out of debt right away and not put you deeper in debt as many have complained.
Pay Debt On Your Own
Work with your existing creditors and come up with a plan to wipe out the debt by your own. This may include negotiating on interest rate or pay down through a balance transfer, which is moving credit card debt from all cards into one, probably new one, that offers interest-free or low interest rate as an introductory. This too has pros and cons.
Here the decision is yours like which debt to pay first, or when to pay the debt, how much to pay per month, etc.
Lower interest rate either with rate negotiation or balance transfer paves way for paying less every month.
Balance transfer means paying one bill per month and not several.
Digging yourself out of debt is a real challenge for many and requires lot of discipline to pay off the balances on your own.
However, if you fail in the credit card consolidation loan reviews, the new creditors may not lower the interest rate as expected and you may land paying more money.