If you feel like your debt is totally out of control, you are not alone. Millions of Americans are facing mounting piles of debt that do not seem to budge no matter how hard they work to make their monthly payments. Perhaps you even have accounts that are in collections, and if so, you are no doubt becoming accustomed to a barrage of calls from snappy bill collectors who are insistent that you send them a payment.
Debt consolidation is a quick and easy fix for financial circumstances like these, and debt consolidation is becoming increasingly popular as more and more people are enslaved by debt. Debt consolidation can allow you to become debt free more quickly than paying your debts the traditional way.
Debt consolidation is the process of obtaining a loan that allows you to pay off all of the creditors that you owe and in turn make one monthly payment for the entire bulk of your outstanding debt. Debt consolidation is a great alternative to filing bankruptcy, and can also help you avoid foreclosure of your home mortgage. Unlike bankruptcy which can have a lasting effect on your credit file for as many as ten long years, debt consolidation can allow you to keep your credit rating strong.
Consolidate Most Types of Debt
The many types of debt that qualify for debt consolidation can take a lot of burden off of your shoulders. You may consolidate debts like student loans and automobile loans, personal loans, Christmas loans, and more.
One of the most beneficial debts to consolidate is credit card debt. Most Americans have a number of credit cards, most of them with large balances. The trouble with credit card debt is that it is usually high interest debt, and most card holders only make the minimum monthly payment. Paying only the minimum monthly payment each month usually just puts a small dent in the amount of interest that you owe on the entire debt to the credit card company.
In addition, if you are late by just a few days in making your credit card payment, you credit card company can charge you what is known as the default rate of interest. The default rate is an exorbitant rate that is at least 19.99% or more, and this will become your new interest rate for the life of the balance and on all new purchases.
Keep More Money in Your Pocket
Consolidating your debt with a consolidation loan will also have a great impact on your financial life by allowing you to keep more of your income in your pocket. Having more cash on hand means that you will use your credit cards less, borrow less money from lenders, and thus avoid getting further in debt.
Getting Debt Free and Staying Debt Free
Once your debts have been consolidated, it is time to look at how you got so deeply into debt in the first place. Whether it is from poor planning or just overindulgent spending habits, begin to work on your money problems so that you do not find yourself in the same situation again and in order to stay debt free.