Make Your Credit Card Debt Affordable

By Martin Tan in Debt Consolidation on April 3rd, 2008

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by Martin Tan

Credit card debt is a growing national problem. Companies are reporting that over 50 percent of credit card accounts are 90 days or more past due. Many Americans are finding they have overextended spending with credit cards and struggling to reduce the debt. Credit card consolidation programs provide a mean of resolving the debt in a more affordable manner.

With a credit consolidation program, the goal is to take all of your loans and to combine them into one monthly payment that you can pay off in just a few years (about 3-6 years in most cases). By consolidating your debt you can often qualify for a lower rate on the single loan because of the larger amount.

Before you agree to consolidate, always do your homework to make sure the new loan isn’t costing you as much or more than the individual loans were. There are disreputable companies out there that will try to avoid giving you the best rate, so shop around before making a decision and don’t sign on the dotted line in an emotional moment only to regret it later. By figuring the total monthly payments you are currently making you can easily compare that to the proposed consolidation amount, thus determining which the best option for you is.

Once a consolidation loan program has been chosen, payments need to be made as scheduled. A single payment is made on the consolidation provider and the provider of the consolidation will pay the creditors on your behalf. These payments must be made on time!

Late payments will put consolidation loan status in jeopardy and creditors may resume collection activities. This can also result in an increase in the loan interest rate. Frequent communication with the assigned credit counselor (or “consolidation specialist”) is vital so that problems or changes can be addressed quickly. This will prevent the account from being returned to collections for payment.

While it is the consolidation program which will make the loan payments, reviewing monthly statements for accuracy is your responsibility. A reduced interest rate should be reflected in the statements and the account should no longer accrue late fees or other charges. If there are inaccuracies and incorrect payment amounts, contact the assigned counselor so these issues can be addressed. This will ensure that the company is paying creditors the correct amount and avoid future problems.

Debt consolidation loan programs vary and picking the right one will depend on the individual situation. Some programs may have a higher monthly payment over a short period of time while others may offer lower payments spread over several years. Let common sense prevail. Look for the loan with a monthly payment that is affordable.

Some companies offer a fixed interest rate and disallow principal payments, which can reduce the loan more quickly. Look for a loan consolidation program that will allow you to pay more when you can!

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Want to know more about loan consolidation? Check out www.allaboutloanconsolidation.com and learn about Credit Card Counselling, unsecured loan consolidation and other related subjects.