Tag Archives: debt
Why Debt Consolidation?
One of the bad credit situations in terms of interest and credibility is to have many loans on you and they are all unpaid. Debt consolidation is considered to be a solution to such a problem. Some people refer that it is not anymore profitable and may get any person into loss but I recommend consolidating this debt buy having a larger loan with provision of some collaterals and for a fix and lower interest rate. I have following points in favor of debt consolidation that will prove you the beneficence of such an act.
Lower Interest Rate
Yes, instead of paying so many smaller loans with relatively different interest rate, it is much easies and convenient to pay a single and lower interest rate. They will decrease this for you due to many reasons; for example; by providing collateral and asking for a mortgage for that is some kind of a secured loan. The creditor s money is not in mush danger as you are allowing him to sale your house or any worthy thing to pay back the loan so interest rate will be lessened.
Then if the debtor is in some kind of bankruptcy or is highly likely to get into one, you can request and negotiate on a lower interest rate and that will make it easier for you to pay your income to the loan and not in the interest only.
Less Monthly Payment
This seems to be attractive to a debt-struck person but this is not an easy task. You have to think about the details and calculate the profit and total amount of payment to be made.
Less monthly payment is logically possible but not up to 50% or more. It is lessened for sure, but only because of lower interest rate or by having a bigger amount your duration of payment is lengthened. Before making any deal, do calculate the wholesome money in all payments in the required period of time.
Fixed Interest Rate
As you are a debtor to various companies with a wide range of interest rate you are paying depending upon your money and duration of debt. So to make it less complicated and incorporated into one lesser interest rate, it is more feasible to have a larger loan with a smaller interest rate, pay the rest of them and then handle only one debt.
So many may be the benefits of debt consolidation but the best way is to pay the monthly payments and other debts regularly so as not to get yourself trapped into such a thing.
Balance Transfer Credit Cards FAQ
When it comes to using balance transfer credit cards, many consumers are filled with questions and concerns. While there are many benefits to using a balance transfer credit card, it is always best to have these questions answered and the concerns satisfied before moving forward with applying for one of these cards.
How Can Balance Transfer Credit Cards Save Me Money?
Balance transfer credit cards can save you money by reducing the amount of finance charges you pay every year. If you transfer even a small amount of money, such a $1,000, from a card with a higher APR to one with a lower APR, you will see a difference. For example, if you have a credit card with a 20% APR, you will pay $200 per year to maintain that $1,000 balance. On the other hand, you will pay only $80 on that same balance if you have a credit card with an 8% APR. That is a savings of $120! Imagine how much you will save on larger balances.
Even better, the best balance transfer credit cards offer 0.00% introductory APRs, which means you will pay no finance charges while that introductory period is active. With some balance transfer credit cards, this special rate remains in place until the entire amount you transferred is paid off.
What is an “Introductory Rate?”
An introductory rate is a special APR that lasts for a limited time. Often, the length of time this rate is in place is determined by your credit history. The introductory rate can be in place for as long as one year, though more common durations are six months, three months, and one month.
What is a “Fixed Rate?”
A fixed rate is a rate that does not change. Balance transfer credit cards with a low fixed rate may not offer a 0.00% introductory APR, but they might offer a 7.99% APR that remains this low no matter how long it takes you to pay off your balance, rather than skyrocketing up to 19.99% after the introductory period is over.
Why Does Everyone Say Balance Transfer Credit Cards are More Convenient?
Many people feel balance transfer credit cards are more convenient because it places all of your debt in one place. This makes it easier to track your expenses, to create a budget, and to get your bills paid on time.
Is it OK to Pay Only the Minimum Payment on My Balance Transfer Credit Card?
From a legal standpoint, all you are required to pay on your balance transfer credit card is the minimum payment. From a financial standpoint, however, this is a bad habit to get into. If you pay only the minimum payment, it can take you decades to pay off your debt – and that assumes you are not adding any more debt to your balance. So, if you want to get out of debt (and who doesn’t?), it is best to pay off more than your minimum payment. Set up a budget that allows for regular payments above your minimum payment to be sent to the credit card company – and stick to it.
Will a Balance Transfer Credit Card Get Me Out of Debt?
Yes and no. If used alone, a balance transfer credit card will not get you out of debt. If you transfer all of your credit card balances to your balance transfer credit card and pay only the minimum payment, it can still take you years to pay off the debt. Therefore, a balance transfer credit card should be viewed as one tool in you tool belt for helping you work your way out of debt. If used correctly and to its fullest advantage, it can help you get out – and stay out – of debt.