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Are you thinking of bundling your multiple debts into a single monthly payment? If answered yes, you must be thinking of either a debt management program or a debt consolidation plan. Though joining a debt management program through a renowned credit counseling agency is a good way of dealing with your high interest debts, the more popular way of getting debt relief is through debt consolidation. However, most debtors are worried about the ways in which they can bundle their debts into a single monthly payment so as to repay their debts with ease. They also think whether or not these options are going to hurt their credit score in the long run. Though debt consolidation is a safe way of deleting your financial worries, yet you must be careful about making the payments so that this entire process does not become unfavorable for you. Here are some smart ways of consolidating your credit card debt.
1. Take resort to a debt consolidation loan: This is a good way of dealing with your high interest credit card debt on your own. You just add up the total debt amount that you owe so that you know the exact amount that you need to take out as the loan amount. The proceeds of the debt consolidation loan can be used in repaying all your creditors and then you just have to make a single monthly payment towards the debt consolidation loan and repay your lender. The interest rates will be much lower and therefore the monthly payments will be lower than what you were paying.
2. You can tap the equity accumulated in your home: If you’re house-rich but cash poor you can tap the equity in your home so that you don’t have to take out an unsecured loan. If you have equity accrued in your home, you can either take out a home equity loan as this is the best way to avail low interest rates, extended repayment term and some other tax benefits. However, before resorting to such an option, you have to make sure that you’re able to make timely monthly payments as the house will be kept as collateral. Take this option only when you’re sure about the monthly payments as failure to make the monthly payments on time will lead to a foreclosure.
3. Transfer your balance to a low interest card: You can also shop around the market for a low interest credit card so that you can transfer your entire high interest balance into that card. There is an introductory period after which the interest rate will become as high as before and you must try your best to transfer your balance into that card within the completion of the introductory period. Also read the fine print so that you don’t have to fall in the trap of unfair fees and interest rates.
Therefore, when you’re not going through a smooth financial state, you can get help of debt consolidation options according to your budget and affordability. Assess the positives and the negatives of each option so that you choose the best one according to your needs.

 

 

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