Is Credit Card Debt Consolidation is an Option?: Student Loans, Home Mortgages & Auto Refinancing

Many people never expect to have to consider credit debt consolidation as an option to staying afloat. The bad economy and high unemployment rates have caused many financially competent people to have to consider consolidating two or more major loans before they turn into bad debts.

Is Debt Consolidation Practical?

Debt consolidation, whether it is to combine home mortgages, car loans, student loans or credit cards may be the best option for some people. Every situation is different. If credit payments are causing stress and feelings of being overwhelmed consider the following questions:

  • Is it a struggle to pay minimum payments on time?
  • Do flexible interest rates continually rise?
  • Are debts on the mind while in bed?

If the answer was yes, a credit and debt consolidation program may be an option.

Is Consolidation Available for Secured Debt?

Secured debt, such as home mortgage loans, car loans and other debt that has collateral, will go through a different consolidation process than unsecured loans. Unsecured loans are credit cards, personal signature loans and any other credit debt that does not have some type of property tied to the debt.

Consolidation for Unsecured Debt?

Credit cards are the most common unsecured debt that is consolidated. The companies charge very high interest rates. People who can only make the minimum payment will pay on these cards forever without paying down any of the principal. One way to get out of the credit card debt when it spirals out of control is to consolidate. Debt consolidation turns many payments into one payment each month. This instantly lowers the household stress level.

Additionally, thousands of dollars can be saved because they are turned into one low-interest monthly payment. Getting out from under the much higher credit card interest rates and exchanging it for a low-interest rate saves money in itself.

There’s more, a debt consolidation firm can help negotiate some of the credit card balance be removed from the card. This will lower the amount that will be refinanced.

After Credit Debt Consolidation

After the consolidation process begins, the creditors will require the customer to stop using their credit cards. The accounts will be closed.

Improved credit scores will be achieved when consistent payments are made over a period of time. Though the credit score will drop initially, it will eventually increase again because the spiral down cycle of not making payments will have stopped. In its place is a responsible person who is timely with the payments and meets financial obligations.

Credit cards, student loans, home mortgages, and other loans can undergo consolidation in different ways. Unsecured debt can be reduced drastically just by making a few telephone calls and making that first step to reducing stress and financial strain.