Credit card debt is very much on the rise again in the USA. The average household in the USA carries around $15,762 in terms of credit card debt. Climbing out of any debt would be taking a lot of sacrifice and discipline irrespective of the strategy you choose. If your credit card bills have been dragging your monthly budget down, it is best to pay them off at the earliest possible. This could ensure some much-needed respite for you. When you are struggling to get rid of debts, only will-power and determination would not be enough. You would be requiring a plan for paying off your credit card debt. You must realize that there are some roads to financial independence that would be offering surprising benefits. One most common and popular way of getting rid of your credit card debts quickly is simply by the consolidation of debts. Here are some reasons why you may opt for consolidation of credit card debts.
Higher Interest Rates
The primary reason why most of you should consider consolidating your multiple outstanding credit card debts into one single debt consolidation loan is simply because of very high-interest rates on the existing few credit cards. Credit card interest rates are bound to vary. Moreover, in this highly aggressive and competitive market, there would be a few credit card issuers that would be offering remarkably lower interest rates as compared to the conventional credit card issuers. So only if you are convinced that consolidating all existing credit card debts into one single debt could be financially beneficial to you as it is offering a relatively lower interest rate, it could be a sensible option.
You Currently Have a Bad Credit Score
If you have allowed your current credit card debt issue to go to such an extent that you no longer have the capacity to take care of the minimum repayments due every month. This could be a compelling reason for you to consolidate all your existing credit card debts simply because of bad credit rating.
Boosting Your Credit Score
Your credit score depends on several factors like since when the accounts are open, kinds of credit you are having, and have been diligently paying all your bills and on time. The total amount owed by you and late payments are sure to impact your credit score. If you are thinking of boosting your credit score, you may consolidate your credit card debts as that may be working in your favor.
Expensive Annual Fees
There has been a growing trend towards charging an annual credit card usage fee from the members. In many cases, this annual fee could be pretty exorbitant, especially, if you are using multiple credit cards and you need to make a number of annual membership fees. In recent times many credit card issuers are fiercely competitive and are fighting with each other to grab new customers. They are waiving the annual membership fees. This could be a solid reason for consolidating your credit card loans. If you have opted for consolidation of credit card debts because of this particular reason, you must ensure that the credit card company has not been accounting for this simply by adding some hidden fees or maybe charging a relatively higher interest rate.
Consolidation of Credit Card Debt as a Personal Loan
It is very unfortunate that many of you do not have any idea about how to budget your spending while using credit cards. You seem to go berserk and end up overspending and then you are compelled to spend years paying back all your accumulated debts. Moreover, this stress is actually, compounded because you need to fulfill the minimum monthly repayment that is due to your credit card company.
In order to avoid all this issue, some of you are looking for other ways of sourcing your debts at a relatively lower cost. Many of you opt for a personal loan. They end up consolidating all their outstanding credit card debts into a single personal loan that could be paid back monthly but at a lower rate.
Although both the debts seem to be unsecured, the personal loan could be cheaper as compared to any credit card debt. If you have ended accumulating a lot of credit card debt that would be taking over a year to pay off, it could be more beneficial for you to consider consolidating your outstanding credit card debts into a single personal loan.
Author Bio: Janet Anderson is a debt consultant and an avid blogger. Her blog posts are very helpful as she shares useful tips, tricks, and secrets about debt consolidation and other debt relief methods.