Hackensack, NJ -- (ReleaseWire) -- 09/25/2015 --For people who may be struggling to pay off their credit cards, there is a light at the end of the tunnel. Credit card debt consolidation is one of the top ways to lower interest rates and thus lower the monthly payment. There are a few great benefits to using such methods as well as some negatives that people in debt need to be aware of before they dive in.
Here's a quick list of benefits listed by www.allstatedebtconsolidation.com:
1.Lower interest rates/lower monthly payments
2.Security of a familiar and trusted option
3.Only one payment every month
4.Less time spent on dealing with debt
5.No more hiding from debt collectors
6.Less stress
7.Avoid the dreaded bankruptcy
8.Improved financial future
9.Get back to having fun and enjoying life again
According to company rep, Jack Dominico, those are the main reasons why consumers decide to go with this solution.
The top benefit in going with this option is that the loans are paid off at once and a debtor's monthly payments will be lower. However, it's important to note that while a lower monthly payment may help in the short term, it will actually extend the loan in that the person will be paying for a longer term of time and they will have to pay more interest in the long term.
So consumers get the reduced monthly payments they are seeking, but they have to pay more in the long run. By paying off loans, a consumer will in due time raise their credit score. A better credit score will definitely improve the consumer's interest rate on future loans. The decision to use credit card debt consolidation will be dependent upon the individual circumstances. It will also depend upon the specifics of the consolidation program.
To consolidate credit cards, a person must combine all of the debt into one loan or one payment program. This can be done in two ways. The first way involves taking out a loan and paying off all of the debt with said loan. However, it's important to note that if the credit score is really low; this will be very unlikely to work. The interest rate of such a loan would be very high - if the consumer could secure the loan at all.
The second method of a consolidation is to go through a debt management program. Here, a company would work with the person and the creditors to come up with a minimum payment plan every month. Many of these companies have come under fire in recent years for not really working out deals and taking consumers money.
That's something that most debtors don't need.
Another great benefit of a credit card debt consolidation through the debt management plan is that the person is making one payment per month in lieu of several payments. This money will then be dispersed to the various credit card companies and the cycle will continue. If someone took out a consolidation loan, it is definitely to the consumer's advantage to pay more on the loan every month if they have extra funds available. By paying the loan off more quickly they will be improving their credit score much more quickly.
Credit card debt can be very burdensome and weight a person down. When it's paid off the person will have improved credit worthiness and they will have a great sense of accomplishment. Legitimate credit card debt consolidation companies do exist and when a person finds a good one, the company will go to bat for them and help to negotiate lower rates, better payment terms and less stress. If debt weighs a person down, it is definitely something that they should consider.
It's important if using a debt management company that the consumer reads the reviews of said company and makes an educated decision on whether or not they should go with them.
About Allstate Debt Consolidation
Allstatedebtconsolidation.com publishes info that helps those in debt get out of it and back to good financial standing. They show consumers what the fees to consolidate might be and which direction might be best for their circumstances. They also cover a wide range of topics within personal finance that helps Americans manage all of their financial needs.
