Considating credit cards

02-Apr-2020 19:48

That's an option if you're looking to consolidate your credit card debt. If you can't pay off most or all of your debt by the time the introductory rate expires, you'll be back to paying high interest rates again.

Then you make one monthly payment into an account held by the counseling agency, and the counselor pays your creditors.That's why it makes the most sense for high-interest debt like credit cards. The downside is that unsecured loans can be harder to get, especially if you have poor credit, and your interest rate will likely be higher.Secured loans tend to have lower interest rates than credit cards, but the big risk is that you could lose your house or car if you can't make the payments. You've probably gotten one of these offers in the mail -- a credit card with a 0 percent introductory rate that lets you transfer balances from other credit cards.In the essence the main reason for consolidating credit card debts should be to take advantage of the lower interest rates charged on long-term sources of debt such as a secured loan or unsecured personal loan.

In addition, if multiple credit cards are in use, then there is also the benefit that taking out a consolidation loan will also reduce the number creditors an individual has to deal with each month.

A DMP is not a loan, and Bovee warns that there is "not a lot of wiggle room" in a credit counseling company's plan for you, which typically last up to five years. If you miss one, you could end up back where you started with high interest rates.