Credit card debt is inevitable when we cross our financial limits. Spending
more than what you can earn is sure-shot way to get into debt. Credit card helps
us in increasing our purchasing power beyond our income levels and soon becomes a good reason for credit card debt. This credit card debt has high interest rates, strict repayment rules and harsh penalties on default. And if things
really go wrong on credit card front, there are blemishes on credit history.
An average person in United States carries around 4 cards. The problem of
managing debts from a number of cards can be overwhelming. It is difficult to
separately keep track of repayment dates, interest rates, and monthly
installments for all the cards. This often leads to missing payments for some
credit card and being slapped with late payment fees. Credit card debt
consolidation brings welcome relief to people suffering from this particular
problem. Majority of the banks, financial institutions and building societies provide credit card debt consolidation loan. A person can consolidate his credit card debts online also.
Getting an online credit card debt consolidation has its own benefits like, the approval times are shorter, the process is hassle free, with no processing fee and near zero paperwork. The interest rates on debt consolidation can also be compared online and the best deal can be reached right from the comfort of your home.
Credit card debt consolidation loans can be of two types- secured and
unsecured. As the name suggests a secured credit card debt consolidation loan
will require a collateral, and since the lenders are getting something to bank
upon if a person defaults on repayments, the interest rates, amount of loan
and repayment schedule on secured credit card debt consolidation loan are
favorable than those with unsecured credit card debt consolidation loan. The
reason for high interest rates, low loan amounts and relatively tight repayment
schedule with unsecured credit card debt consolidation loan is the lack of
collateral. The lenders feel the situation risky and hike the rates to offset
Overall the credit card debt consolidation loan helps in clubbing multiple
credit card debts into a single one, reduces the debt burden, and prevents
harassment from lenders. If the credit card debt consolidation loan is repaid
fully on time it improves the credit score also.