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5 Important Tips To Help You Get Your Credit Card Debt Consolidation Right

Does your credit card debt feel like a big mountain you can’t get out from under? Do you scream silently every time your statement comes in? Well, you’re not alone. That’s in no way good news, given that research shows that the average American household carries credit card debt of around $15,675. This is why credit card debt consolidation services have become so important.

In order to get your credit card debt in control and eventually pay it off, you should start by thinking about companies consolidation your debts. First, you need to figure out whether you need a new consolidation loan, a new credit card or the services of a credit counseling service. The one you decide on should provide the money needed to pay down balances on your credit cards. The upside to this is that you’ll be left with a single payment to keep track of, and often at a lower interest rate than your credit cards.

Deciding On The Best Option For You:

How do you know which among the abovementioned options will give you the best chance at consolidating your credit card debts? First, you need to carefully and realistically assess your financial situation. You may need to consult a professional to determine what works best for you. This article lists five of the most important tips to help you make the best decision.


What Is Your Credit Score?

This is the first and most critical step in the entire process. If you have your latest credit reports, you need to go through them to ensure that they accurately reflect your financial status. You’ll need to see all three reports – Experian, TransUnion and Equifax – because a simple error may prevent you from getting debt consolidation loan approval. You can dispute errors on the report by writing a letter to the bureau and including supporting documentation to prove the error. If the report is accurate, you’ll have most of the information you need to make a decision.

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What Are Your Options?

As stated, there are three options for credit card debt resolution, and it’s important to learn as much as you can about each at the outset. As you do, consider your own credit history, which is the most important factor when making the decision.

  • Consolidation credit cards–if your current credit cards have very high interest rates (higher than 17 percent), you have the option of signing up for a lower interest rate card and transferring all your balances to it. This will result in savings in the financial charges as well as allow a lower monthly installment that will be easier to cover. If you have a good credit score, you may qualify for a 0% balance transfer credit card which can give you as long as 18 months to repay the balance.
  • Debt consolidation loans –the other option is to get a debt consolidation loan, which is a loan that charges a simple/fixed interest instead of credit cards whose interest rates are variable. They have a repayment term of 3-5 years, after which you’ll be debt-free. You can get consolidation loans from both credit unions and banks, but they won’t have the same requirements. You do not need to have a good credit score in order to qualify for a consolidation loan. You can compare Las Vegas online companies as they may have better rates than conventional sources.
  • Debt management plan –this is for consumers with a serious debt problem. You can turn to reputable credit counseling agencies who will help you to get into a debt management program. If you do this, you’ll have a single payment to make every month to the agency, which then pays all your creditors. This will take about three to five years.
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By now you may be sure about what you need to do, which brings us to the third point.

How Much Will It Cost?

Credit card debt consolidation isn’t necessarily free of charge, which is why it’s necessary that you make your own calculations. For instance, the fee with a card balance transfer could be $300. Debt consolidation loans also have some fees, particularly early payment penalties with some creditors or loan origination fees. In addition, you should be able to afford the monthly installments. As you consult, find out what the total cost of each option is and include them in your consideration.

How Will It Affect Your Credit Report?

Credit card debt consolidation can affect your credit score in many ways, depending on the consolidation option you choose.  For instance, if you’re moving multiple card balances to a single card, you want to avoid maxing out the balance which affects your credit utilization ratio – contributes 30 percent to the total score.

Signing up for a debt management plan also adversely affects your credit score. This is because your creditors will close or suspend your accounts for the period you’re in the debt management plan, and this may affect the credit utilization ratio. Also, applying for a new credit line will create something known as a hard enquiry on your credit report, which may lessen the average age of your credit history, making its impact on your final score much lower.

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Conclusion – Pick Your Final Plan

Having considered everything, you need to pick which option works best for you. For a consolidation card, you’ll need to find a lender who offers lower interest rates and who can also give you enough credit to cover all your cards. To get a debt consolidation loan in Las Vegas, you need to go online and research various lenders and their references. The same applies if you join a debt management program.

However, all these are merely starting points. In reality, in order to fully resolve your credit card debt, you need to commit to one plan until the program is completed. It is also important that you review your credit report every three months to know how your credit score is being affected by your consolidation plan. These reports can be sent to you for free if you contact each of the credit bureaus through their online sites.

Isabella RossellineeAbout the Author:

Isabella Rossellini is a contributory writer to several renowned financial information sites, with particular interests in debt consolidation, debt management and financial health and related subjects.

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