Get Your Finances Tidied Up With Bad Debt Consolidation
As of December 2009, the United States had 576.4 million credit cards circulating. This is according to the Nilson Report dated February 2010. The Federal Reserve reports that 98% of the revolving debt is credit card debt and amounts to $864.4 billion as of January 2010. Average household credit card debt is over $16,000. The credit card default rate in the United States is 11.37%. Clearly, millions of people in the United States could use some help with bad debt consolidation.
Debt Consolidation
Debt consolidation is the process of moving debt from many high-interest revolving credit lines to a low-interest loan. All of your revolving debts are combined. In order to even start to take your financial situation in hand, you must get rid of high interest loans.
Consolidation Loans
A consolidation loan is an unsecured loan from the bank or a credit card company willing to give you a lower rate. An unsecured loan is a loan that does not require you to put anything up for collateral, such as your house or car, to obtain the loan. The biggest benefit to a debt consolidation loan is that you can clear off all of your high-interest credit cards and combine the debt into a loan with a fixed monthly payment and lower interest rate.
Borrower Beware
Beware of companies who promise to take care of all of your debt problems and negotiate lower rates with the card companies. The problem is that they build in a fee to your monthly payment. In other words you are paying them a percentage of your debt to handle your financial mess. This may or may not be worth the money. You could take the money that you would be paying them and add it to the payments yourself.
You have probably received many low-interest balance transfer offers in your mailbox. These may look great at first, but read the fine print. How long will the low interest rate last? What will the interest rate be after that? Most likely you will be back where you started – with a high-interest credit card.
If you consider bad debt consolidation as a solution to your financial problems, e sure to do your homework and check out any company you are considering doing business with. Be careful that your emotions do not get the best of you and that you do not get taken advantage of, ending up in an even worse situation than you started in.
Looking for inside information on How to Eliminate Credit Card Debt quickly? Get the low down now in our exclusive bad debt consolidation guide.