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Credit Card Debt Consolidation Loans

There are so many Americans who have gone through the painful process of learning the hard way that credit cards, when used carelessly and to purchase things that people don’t need, that they can’t afford with cash, and letting those balances constantly carry over several months, can be a dangerous thing.

A lot of people have been through a process where they need to get a credit card debt consolidation loan, or they may have even consolidated their credit card debt all onto one single balance transfer credit card with low interest, just so that they don’t have to pay the sometimes high interest rates that are offered on credit cards on a revolving basis, and also so that they can just pay one single bill under a lower APR without having to worry about doling money out to several different lenders.

It’s easier and more convenient, and more often than not, people who may think they are headed for trouble with their credit card debt actually needs these loans of balance transfer cards to keep themselves out of hot water, and to again bring their debt down to a manageable level. One good thing about the age of the internet is that we have at our fingertips, the ability to comparison shop for a lot of goods and services like never before.

This makes the environment for loans and mortgages a very competitive one, especially in this age of lender reticence to loan money, and especially if you are a good qualified candidate to meet loan requirements, you will be fought over by these companies for your business, and you should see some really low APR offers come in since you are a hot commodity if you’re a good loan risk.

Loans for the purpose fo credit card debt consolidation have a few purposes for the consumer. First, if they are offered through some sort of nonprofit organization, they aim to get people who feel that their credit card debt has gotten out of control, out of debt as soon as possible, and teach them to not get themselves into that kind of debt again. I think this approach is great, because it’s not just putting a bandaid on the problem and letting it fester again, but rather it is educating people on how to prevent themselves from getting into this kind of debt again, reducing the likelihood that they will get themselves in hot water again.

Some nonprofits will actually negotiate lower interest rates with each of your creditors, collect a monthly sum from you that you both deem agreeable, and they actually take that monthly sum and dole it out to the credit card companies themselves. By making the agreement that you will pay each company a certain sum each month, the creditors agree to let you pay a lower interest rate in exchange, but most of the time your accounts are suspended and you may not use them again – that’s usually part of the agreement.

There are other – usually for-profit, companies, that will actually give you a loan that is low interest, so that you can turn around and pay off the creditors one at a time with the money you’ve gotten, and then you will just have the loan repayment to worry about. This accomplishes the same thing, but it’s more like you are just doing it yourself, and you may have more flexibility in negotiating a lower interest rate on your loan, and you may in fact get a better deal if you do it this way sine you are paying one flat APR, not several lowered APR’s on a still revolving basis.

When looking for a loan that you intend to use as a credit card debt consolidation loan, you may want to consider a few things. First, make sure you are getting the best possible interest rate on you loan that you can get. You may be able to go to a loan comparison website and see what several competing creditors have to offer you in terms of interest rates, terms, and length of time to repay the loan.

Second, make sure that the amount of time to pay back the loan fits in your timeline of when you’d like to be totally debt free (at least from credit card debt). This means that you need to calculate what you can afford, budget wise, and figure in the timeline with that. For example, if you want to pay the loan off in five years for sure, but the five year loan term still makes your monthly payments too high, then try to maybe negotiate a longer loan term so that your monthly payments will be less.

Read the fine print. Make sure you did not sign up for some flexible APR loan, where your rates may go up if the prime rates go up, or that if you miss one payment or forget to make a payment of two on time, the company does not have the “fine print right” to jack your rates up to exorbitant amounts and make it even less affordable than before.

Take your time and don’t sign up with the first seemingly good loan offer than comes along. Trust me, especially right now with the economic climate the way it is and the hunger for loan business, you should be getting quite a few enticing offers, and you should have the “pick of the litter” so to speak for which loan you want and which interest rate and term you want your loan for.

When it comes to consolidating your credit card debt through a self-attained loan, you want to make sure you carefully plan how you will pay your creditors off, and make sure that you either put these cards away somewhere safe or cut them up, and only save one for emergencies. Rumor has it that it’s not good for your credit score if you call and cancel your credit card accounts, so as long as you just cut them up or don’t use them at all, you should be fine.

The whole idea is to get yourself free from these debts so you can breathe easy, and it’s sort of defeating the purpose if you keep on using your credit cards once you’be paid them off.