As many residents of Wisconsin know, credit card debts can be a burden when payments are not made on time. Often, those in debt have more than one debt to settle. In such cases, it may be wise to seek assistance from resources offering debt relief. By consolidating debts, a person may roll all debts, including credit card payments and payments against loans, into one monthly payment. This method may also help in simplifying the debt and making the repayment easy.
The first step toward a consolidation is to consult a credit counselor. A credit counselor may provide useful advice on managing finances and avoiding future debts. Many people incur heavy debt because they fail to make timely payments after balancing their other monthly expenses. Another approach would be to speak with the creditors individually to see whether they can lower the debt or request changes to the monthly payments.
Transferring all the debt to a single credit account may also be a way out. There are credit card companies that offer zero or low interest balance transfer, thereby allowing a person to consolidate all debts into one account. This will allow a person to make only one payment every month instead of making multiple repayments, and may also lead to lower payments. Nonetheless, one needs to be well-informed while transferring debts to one account as many credit card companies offer zero or low interest for a limited period of time. If a person is late while making payments, the interest rate may go up. If the same credit card is used for making purchases, additional interests may be applied as well.
Other consolidation methods include taking a debt consolidation loan, in which a person approaches banks or credit unions seeking a loan with a lower interest rate to repay the existing debts. But, the lower interest rates may not last for long and a revised rate may be provided. One may also opt for a home equity loan or taking a loan against the home. If one fails to repay this loan, the person may also lose the home to the bank.
Source: ConsumerFinance.gov, “How can I safely consolidate my credit card debt?,” April 10, 2014