Debt relief consolidation secrets
Nobody likes being in debt and worrying about how they are going to pay their debts off, but unfortunately with the economy as it is there are more and more people with financial worry. When your financial situation becomes dire you may feel that you are sinking deeper and deeper into debt and that there is no way back out.
You should know that even in a dire financial state there are debt relief consolidation solutions that can help you get back on your feet. There are typically three main categories that debt relief consolidation solutions fall into: balance transfers, credit counseling agencies and consolidation loans. Let's take a look at each one of these in more detail.
Balance transfers are mainly used for credit card debt. These work by transferring a high credit card debt over to a new credit card that has a much lower interest rate. Many credit card companies will offer balance transfer deals where they will offer a very low interest rate for a period of time for people that transfer their credit card balances over to them. This can be a great deal if you are currently paying 19% interest and can change to a credit card that has only 5% interest.
If you consider doing this you do need to be careful and always read the fine print before signing any contracts. The problem with balance transfers is that the low interest rate is for a specific time period, usually a few months, after which time the interest rate will be returned to the regular rate.
The regular rate of interest charged will vary between credit card providers and although you might enjoy a few months at a really low rate, when the interest changes the regular rate you could end up with a much higher rae than you have now. This is not to say that balance transfers are a bad idea, it just means that you should understand all the details before going ahead and make sure that it is a deal that will be better for you long term and not only in the short term.
Credit counseling agencies don't provide you with any loan at all for paying off your debts. Instead they will work with you and your creditors to help you pay off your debts. The credit counseling agency will contact each of your creditors and negotiate a better deal on your interest rates, fees and in some cases can get the amount you owe reduced.
A well respected credit counseling agency will be well known to most lenders and will have good negotiating power with them. When they have negotiated with your creditors they will work out how much you need to pay each month to cover your debt repayments. You will then pay them this payment each month from which they will pay all of your creditors. This is easier for you because you only have one repayment each month to worry about and you have a better deal on your debts.
Debt consolidation loans are when you take out one loan to pay off all your other debts. The benefit of this is that you will have just one payment each month instead of paying multiple creditors each month. The downside to a debt consolidation loan is because you are taking out this type of loan you are classified as a high risk borrower which means you will be given a higher interest rate. This is also another loan and if not managed correctly can further damage your credit score. If you can get a debt consolidation loan with a reasonable interest rate and will work out to a lower monthly payment than what you are currently paying then they can be very beneficial.
Whatever option you choose it is important to do your research and make the choice based on what is best for your particular situation. Whatever method will reduce your overall debt and repayments each month will help you to pay off your debt and be financially comfortable again.
TAGS: debt relief consolidation, debt relief consolidation loans, credit card balance transfers
Article Source: Messaggiamo.Com
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