Credit card consolidation is a useful tool to have when you are drowning in overwhelming debt. Having credit card debt is unavoidable these days, but getting out of it can be daunting. You can definitely use all the help you can get.
That said, a credit card consolidation is not without its problems. This loan works by merging all your credit card debt into a single, more manageable loan. There are obvious benefits to this, of course. But are you aware of its disadvantages.
Here is a list of the pros and cons of credit card consolidation:
Pros
Among the pros and cons of credit card consolidation, one of the most beneficial aspects of the loan is how manageable it is. Without consolidation, you have to manage possible several debt accounts. Here, you only deal with one. Not only does this mean you only have to pay one debt per month, it also means you only deal with one interest rate, one APR, and one loan lifespan.
Credit card consolidation allows you to get special rates on new balance transferred to the new card (where you debt is consolidated or merged). This is because the consolidated loan is essentially a new loan, which allows you to negotiate new terms.
When handled properly, a credit card consolidation loan can allow you to pay less on your
Existing debt. This is possible if you find a loan with lower rates. With credit cards this is extremely important, since interest rates on this type of loan is volatile. This benefit is especially true for short-term debt, or debt you can pay off in a short period of time.
By consolidating your credit card debt, you eliminate the numerous fees you have to pay to maintain your credit card. This means you are reducing your debt by the simple virtue or merging your card debt into one account; the savings you can get here would depend on how many credit cards you actually have.
Cons
It isn’t particularly easy to qualify for a credit card consolidation loan. Which means to say: if you have poor credit standing, you may not be able to take out a consolidation loan. This may seem ironic, especially since many consider the consolidation loan as a credit repair or credit building tool. Still, there are ways to qualify for this type of loan if you are willing to avail of higher interest rates or longer loan lifespan.
When used improperly, a credit card consolidation loan can do more harm than good. This is, of course, true for all types of loans and financial products. But many mistake the credit card consolidation loan as a fresh start. Instead, it’s actually just a balance transfer that would allow you to pay off your debt with better and more manageable terms.
A possible tradeoff to better terms in a credit card consolidation loan is a longer payoff period, which would mean you run the risk of paying more than you if not handled properly.
In the end, it’s a matter of being aware of the pros and cons of credit card consolidation so you can easily manage your finances and pay off your debt properly. Find out more at consolidation.creditcard. You can also visit this page if you want to get most out of your credit card while avoiding debt: https://www1.nyc.gov/site/dca/consumers/credit-cards.page.
When applying for a credit card consolidation loan, one should weigh the pros and cons of every deal. See what people say about this financial move at consolidation.creditcard.
