Debt Consolidation Loans for Credit Card Debt

by : Ronnica Rothe

Credit card debt can be hard to handle. Depending on your income and spending habits, you may have more debt than you can reasonably pay off without help. If you are looking for a solution for credit card debt, consider your options carefully.

If you have already exhausted all self-help options, you could seek a debt consolidation loan. Debt consolidation loans give you the cash to pay off your credit card and other debt. You will then pay one consolidated payment each month to the lender. The interest rate on your loan will determine if this is a good idea for you or not. The lender will offer you a rate based on your credit. If you have large amounts of credit card debt or poor credit, the interest rate you will be offered will not be helpful. You may even be denied a debt consolidation loan altogether.

Another option to consider is to get a home equity loan to pay off your debt. If you have equity in your home, you will often be able to obtain a reasonable interest rate on your loan. However, you are now securing your debt with your home. If for any reason you default on the loan, your house can be taken away.

If a home equity loan is not for you, consider a less risky and often more beneficial alternative: a debt management plan. A debt management plan is a way to have the benefits of a consolidated payment and lowered interest rates. Unlike a debt consolidation loan, you will still have the accounts with the original creditors. Each month you will pay the debt management company one payment who will then distribute your funds as needed between your creditors. They will also negotiate with the creditors to get you benefits such as lowered interest and cancelled fees. This type of plan provides you with the accountability you need to get out of credit card debt.

After considering what options will be best for you, make the decision that you are comfortable. Getting help to get out of credit card debt is a noble step to financial independence.