Credit card consolidation is a very useful strategy for paying off your credit card debts, by transforming them into a different type of debt with more favorable terms. Generally, there are multiple ways that you can transfer your existing debt into a consolidated account that lets you take care of your payments through a single monthly payment obligation.
Some of the most common methods of credit card consolidation available on the financial market are as follows:
• Balance Transfer — This method effectively transfers your existing credit account balance to a new account. For instance, if you have three credit cards that you are paying off, and get a balance transfer credit card consolidation service performed, your three cards’ balances will be transferred to a new, fourth account that contains the added sum of all three previous ones.
• Personal Loan — Various credit card consolidation firms also offer personal loans which help you manage your debt by letting you pay off one or more of your credit accounts on the spot and leaving only the obligation to pay back the single personal loan.
• Consolidation Loan — Some online lenders offer consolidation loans, which are similar to personal loans, except that they are designed for debt management and often handled by the company in question on your behalf. This can be helpful in situations where you do not want to have large sums of money showing up on any of your accounts.
Which Option Type of Credit Card Consolidation Is Best?
While it would be great to be able to recommend a single, constantly effective debt management solution, the truth is that each individual’s situation is different, and requires a slightly different approach. The solution to your debt management issues often hinges on the agreement you made with your original creditors. Find more information here - http://www.toptenreviews.com/money/debt/best-debt-consolidation-companies/
For instance, a balance transfer can be a great idea if you have good enough credit and can trust yourself not to spend on your existing credit accounts. If you are worried that having open accounts will lead to you spending, a consolidation loan might be the most effective way to keep that debt safe.
You should also consider your interest rate. Often, promotions and other special deals will allow you to perform balance transfers to 0% credit accounts or other special financial devices that help you earn a better rate. In these cases, it can be very beneficial to sign up for credit card consolidation, even if you are not struggling with your payments.