Debt Consolidation - How To Consolidate Credit Card Debts

If you are applying for a credit card for the first time, it may all seem very juicy and grand. However, if you do maintain a good credit card score then you can survive and enjoy the benefits of using the card. On the other hand, in most cases, card users tend to exceed their limit and only use their credit cards without thinking of repaying their debts.  Within a year or two you find that you have gotten into the debt trap and paying only interests over interest while the capital still remains.

Of course this is a very alarming and frightful moment when you are feeling stressed out and trying to come out of this trap. Don’t lose hope, there is always a way of getting out of serious situations like this. You can try the debt consolidation method where you make a list of all your small debts and the interest rates etc. Work out the amount that you have to pay per month for each of these debts including interest. With this done, you can then think of applying for a debt consolidation loan with a single rate of interest and a single monthly payment. Wondering how to do this? Here are a few tips that will be very helpful.

1.    The first step is to check your credit score as this is what says whether you are eligible to get a loan or not. Once you are certain that your loan will get processed, you can go ahead and apply. Most of the finance institutions, banks or lending firms will want an assurance from you on what you are going to spend the loan money on.

Do a thorough research on the firms that allow you to directly pay up your credit card bills so you are certain that it is paid and the lender is confirmed that the money is not spent otherwise. You can make use of the websites that these lending companies have and browse or use their customer services online to clear your doubts before settling for a loan with them.

2.    Once you have done your queries and have shortlisted a few lending companies, you should then make inquiries about their interest rates, loan amount approved etc. However, the rate of interest depends on your personal credit score. Hence you should pick the one that offers the lowest interest rate with the best offers of a loan.

3.    Check out the amount that you should pay each month and see whether this fits your budget so that you don’t have to get into further debt to pay this one off.

4.    Don’t forget to gain information on the late fee payment, service charges etc. that are applicable when getting a loan.

This is a very effective method to use to get out of debt caused due to bad management of credit cards. Be careful when you are planning to use your credit card again for shopping or any other purpose. Enjoy using your card but be alert not to fall into the debt trap again.

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