If you’re carrying a high number of credit card debts, you might want to consider a consolidation loan to pay off your balances. Such a loan leaves you with just one payment (the loan) instead of several (to your various credit card companies). This has the obvious bonus of reducing not just the number of payments you have to make, but the overall amount of interest that you’ll be paying as well.
Before you decide consolidation is right for you, however, you need to bear in mind these four tips:
- Credit card consolidation isn’t right for everyone. It’s a long-term commitment to pay off your credit card debts in full, and you need to be sure that you’ll be able to make the necessary payment for as long as it takes—if your credit card debt is high, that could mean several years.
- Debt consolidation isn’t bankruptcy, but it will still have a negative effect on your credit rating. Consolidation is viewed as a trouble sign by creditors, and that will be reflected on your credit report. It will take time to rebuild your rating, and to regain the trust of your creditors.
- Debt consolidation isn’t a cure-all, and it won’t do you any good if you don’t change your spending habits as well. To avoid finding yourself in financial difficulty all over again down the road, you need to learn how to manage your finances. A good credit counsellor can help you set up a budget, offer tips for cutting spending, and help you to rebuild your credit rating.
- Let us repeat: debt consolidation isn’t a cure-all. Once your credit card balances are paid, it’s going to take hard work on your part to make sure you don’t run up the balances again. Your best bet? Get rid of the cards altogether.
The bottom line is that credit card consolidation is a viable option for some, but not for everyone. You should also know that sometimes banks are reluctant to provide consolidation loans to clear debt that is owed to other banks. If you do undertake a consolidation loan, you should do so with the support of a certified credit counsellor, who can help make sure you make a success of it and put you on the road to a healthy and secure financial future.
For more information on credit card consolidation—or to find out what your other options for financial relief might be—call us today for your free, no obligation consultation: in Ottawa call 613-237-5555; out of town, call toll-free 1-800-517-9926 or book online.