Eliminate Your Credit Card Debt, But How?

Can a debt consolidation loan eliminate your credit card debt? A consolidation loan might (or might not) be the key. There are several things you must consider when making the choice to consolidate debt using a debt consolidation loan.

First, is a debt consolidation loan your best choice to eliminate or substantially reduce your debt? There are other options available to you, including credit counseling and bankruptcy. Obviously bankruptcy is a last resort. You must examine several factors when making your decision on which debt reduction / elimination strategy to use. You need to get information on debt consolidation to make the correct decision.

?How much outstanding debt do you have?

?What is the interest rate of your current debt? Many credit cards have interest rates of 14% - 22%, depending upon your credit rating and payment history. Obviously, the higher your current average interest rate, the better off you will be if you consolidate your debt with a consolidation loan at a much lower rate.

?How much of your outstanding debt is unsecured? Unsecured debt has no collateral against it. Credit cards, student loans, store charge cards and medical bills are examples of unsecured debt. If you have over $7,500 in unsecured debt there a multitude of lenders that you can look at. Student loans fall into a different classification from other types of unsecured debt. In the United States, most are backed by the federal government. Usually you will have to use a secured debt consolidation loan to pay off your unsecured loans. You may also be able to refinance your secured debts, but you usually cannot consolidate secured debts.

?Do you own a home or other substantial assets to use as collateral for a debt consolidation loan? If you own a home or other real estate, how much equity do you have in it?

?What type of interest rate is available to you for a consolidation loan? The interest rate you receive on your loan is affected by a multitude of factors including the prime rate. For student loans, the borrower interest rate on consolidation loans is currently calculated as the weighted average of the interest rates in effect on the loans being consolidated, rounded up to the nearest one-eighth of 1 percent. They are capped at 8.25 percent.

?How is your credit rating? Someone with a very good credit score has options open to them that those with lesser credit ratings do not.

Keep in mind that if you have more than 20% equity in your home, you are usually not required to carry private mortgage insurance (PMI). If you have reached the 20% equity stage through either paying down the principal, asset appreciation, or both, you can probably drop PMI and lower your payment. On the flip side, if you are not paying PMI and you take out a consolidation or other home equity loan, you may put yourself back under the 20% equity threshold. This would require you to get a new PMI policy. Factor this in when making your cost / benefit analysis.

If you are constantly slipping backward and your cash flow is poor, you can improve things with a debt consolidation loan. Be careful and weigh your options carefully. Take into account the tax benefits you may receive by using a home equity loan to consolidate your debt. This benefit will vary depending upon your tax rate. You can get many free quotes for debt consolidation loans. There are several places that have multiple lenders compete for your business. Talk to several lenders to see which will give you the most favorable terms. You can substantially lower your monthly payment and significantly improve your cash flow situation with a debt consolidation loan. Just make sure this is the right choice for your needs.

Steve writes about a multitude of topics from home theater and automation to business and finance. See his website, The Debt and Loan Consolidation Guide for more information.

---

How to Avoid Bankruptcy

Bankruptcy is a legal way to offer folks with high... Read More

Are You SURE Your A Bad Debt?

Many people who seek the advice and guidance of debt... Read More

How to Negotiate Debt Settlements

Knowing how to negotiate debt settlements is the key to... Read More

What Is A FICO Score?

Your FICO score or credit score as it's commonly called... Read More

Bankruptcy ? Bankruptcy Myths

Bankruptcy has long been a big question mark in the... Read More

Personal Debt Reduction Practices

Personal debt reduction practices, the steps people take to relieve... Read More

Should You Join a CCCS - Consumer Credit Counseling Service for Debt Relief and Financial Freedom?

Do You Need to Join a CCCS - Consumer Credit... Read More

Can You Escape the Trap of Ever Growing Debt?

It's difficult not to be concerned when facing numbers like... Read More

IVA Information

If you're thinking about an IVA, it is essential to... Read More

Debt Relief with this Simple Formula

Is there a way to get out of debt without... Read More

Debt Getting You Down? - Make a List!

Debt is not much fun and when faced with it,... Read More

UK Debt When Moving Abroad

The idea of moving abroad to escape debt seems to... Read More

Bankruptcy As An Option

If your financial worries are preventing you from sleeping at... Read More

Bankruptcy 101

Bankruptcy still remains a mystery in the eyes of many... Read More

What is Debt Settlement and How Does it Work?

Debt settlement involves negotiating with a creditor or creditors to... Read More

Bankruptcy: What You Need to Know

Personal bankruptcy is a legal way to give people with... Read More

Bankruptcy: Which Chapter Do I File?

There is more than one kind of bankruptcy. You should... Read More

5 Options Toward Debt Relief

If you are in debt, well over your head in... Read More

How to Become Debt Free

In today's consumer society it is all too easy to... Read More

Craving For Financial Freedom

Have you ever felt trapped in a Rat Race and... Read More

Bankruptcy Your Best Bet?

Filing bankruptcy is a common practice among the U.S. Over... Read More

Credit Repair? Its All Up to You

Log onto to a search engine such as google.com and... Read More

Stop Debt Collectors

Can you stop debt collectors ? . . .You better... Read More

Why You Should Get Out of Debt Today?

The main reason for getting out of debt today, is... Read More

Debt Problems? You Can Negotiate With Your Creditors

It is always possible to negotiate with creditors ? even... Read More

Life on a Debt Management Program

Signing up for a debt management program is easy; it's... Read More

Is There A Way Out Of Your Debt Problems?

Do you have multiple debts? Do you have just one... Read More

Bankruptcy Reform

There are some new bankruptcy laws going into effect before... Read More

Tips To Take Control Of Debt Collection

Yes, debt collection tips can help. You may think you... Read More

How Do I Lower My Debt Burdens?

How do I lower my debts?There are several ways of... Read More

Debt Elimination 3

Planning To Achieve Debt EliminationOnce you have started the process... Read More

Five Hot Tips To Get Out Of Debt Forever

The financial and psychological burden of being in debt causes... Read More

Debt Settlement

What is debt settlement?Debt Settlement is a process to settle... Read More