Credit cards are too common today, many people own more than one card and most of their cards have monthly carry forward balances. Most people get into a debt problem due to they can't manage their debts owed to multiple creditors effectively. For people who are not good in managing their finance, managing multiple credit cards with balances can be a nightmare for them. Fortunately, debt consolidation provides a solution to help them combine these balances into one account for ease of debt management. Let's explore how debt consolidation can ease the debt management:
An effective debt management involves paying the monthly payments on time for each account. Unless you are good at management, remembering multiple due dates for each account can be very troublesome. You may forget to make the payment or pay it late. Late payments incur extra finance charges and damage your credit score. If you combine these accounts into one and you only need to remember one payment each month, the risk of forgetting it will be minimized.
There are two ways of debt consolidation:
Way # 1: Get a debt consolidation service
You can ease the debt management at your side by letting a professional debt consolidation service to take care of the multiple monthly payments for you. There are many debt consolidation programs that provide this type of service. You just need to make a monthly payment to the debt consolidation company. It distributes the money to your creditors according to the payment amount. Of course, the service involves a reasonable monthly administrative fee. Normally the monthly payment made to the company will include the fee.
Way # 2: Get a consolidation loan
Another method involves getting a consolidation loan to pay off the existing balances. Generally, consolidation loans carry low interest rate compare to regular personal loans and credit card rates. So, you could take advantage of consolidation loan to settle the high interest loans and credit card balances that indirectly combine those balances into the principal of a consolidation loan. Depending on your credit rating, you may not get the lowest interest rate loan if you have average score, but you still can take advantage of saving some money because there are many consolidation loan offers with attractive low interest rate for people with average credit rating. If you are a homeowner, you can secure a consolidation loan with your home to get the much lower rate than unsecured loan, but at the same time you are putting your home at risk of foreclosure. After paying of the multiple balances on different credit accounts, you just need manage one accounts, eliminate the hassle of managing multiple debts.
The result of debt consolidation eliminates your hassle to manage them in separate accounts. All balances are lump sum into the principal of a consolidation loan or let a professional from the debt consolidation company to manage it for you. Both methods work to achieve an effective debt management through the consolidation of multiple balances into one monthly payment.