Consolidate Credit Card Debt
The need to consolidate credit card debt has never been higher. That’s because more people are more in debt now than ever before. And, most of this debt is with credit cards. Credit card debt is extremely burdensome because of high interest rates and the feeling that you are never going to get them paid off. In most cases getting into a lot of credit card debt has been because of unwise choices. The solutions could be to have a plan to consolidate credit card debt.
This means effective debt consolidation and reduction. Although many people are afflicted with some kind of debt, it does not mean that you cannot move on, and live a great life. As with anything in this world, it all depends on how you look at the situation. You can either take the glass half-empty approach or the glass half-full approach. It is high time you re-examined your income and debt. You can get out of debt with the right assistance.
There was an interesting article that gave some good insight into one way of how to consolidate credit card debt. Below is the article that was published on the Wall Street Journal site:
| By RUTH SIMON and ANDREW R. JOHNSON Personal loans fell out of favor during the financial crisis. But they are starting to make a comeback at lenders such as Wells Fargo, Discover Financial Services and TD Bank.
Some borrowers are using personal loans for big-ticket items, such as paying for a wedding or home repairs, or to help children get settled after college. At a time when many people are seeking to pare their debt, a personal loan—which isn’t secured by borrower assets—can also help borrowers take control of existing debt and pay it off over a fixed term. The increased interest in personal loans comes as consumers across all income levels are looking to get more disciplined, says Todd Denbo, a senior vice president at Wells Fargo. “They want a known monthly payment and a known light at the end of the tunnel,” he says. Robert Barabani, a 30-year old accountant in Elmwood Park, N.J., is consolidating $15,000 of credit-card debt used to pay for home improvements into a personal loan from Wells Fargo. “We decided to get the charges off higher-interest credit cards and get a longer-term loan with a lower interest rate,” he says. Lenders, meanwhile, are looking for ways to grow. Wells Fargo saw double-digit gains in personal lending last year, says Mr. Denbo, who declined to provide specific figures. Originations of personal loans fell sharply in 2008 and 2009, but have begun to edge up, increasing 4.5% in the first 11 months of 2011 compared with the same period a year earlier, according to the credit bureau Equifax. Some banks are ramping up their marketing. U.S. consumers received 424.8 million offers in the mail for personal loans in 2011, up from 290.5 million in 2010, according to research firm Mintel Comperemedia. TD Bank, a unit of Canada’s Toronto-Dominion Bank, saw a 25% increase in applications for unsecured personal loans in November and December, says TD Bank Executive Vice President Michael Copley. Renewed interest in personal loans comes as falling home values and tighter lending standards have made tapping home equity, once a common source of financing, less attractive and, in many cases, impossible. Just 15% of homeowners who refinanced their mortgage in the fourth quarter increased their loan balance by at least 5%, the lowest level in 26 years, according to Freddie Mac. The number of new home-equity line of credit originations has fallen every year since 2006, according to the credit bureau Equifax. Such loans aren’t without risk, of course. The biggest: It can be tempting to pile on new charges after consolidating existing debt. “If you’re someone who relies on credit cards as a supplemental source of income, getting into a situation like this is always dangerous,” says Abigail Ford, a manager at Consumer Credit Counseling Service of San Francisco. Mark Cole, chief operating officer of CredAbility, an Atlanta-based credit counselor, advises borrowers to close existing lines of credit after taking out a personal loan. Otherwise, “all you are doing is really digging a deeper hole,” he says. A borrower with good credit can expect to pay 8.49% to 14.49% for a personal loan with a five-year term, according to loan tracker Informa Research. That compares well with rates as high as 24.9% on some credit cards, but can be higher than rates on mortgages and auto loans that are secured by collateral. |
There are plenty of ways to get into debt. To consolidate credit card debt may be the answer. The really harsh aspect of this is that once it begins, it tends to spiral downward more and more. This is where many people make the mistake of doing nothing but accepting it.
When it comes to debt, it is always best to examine your situation fully in the beginning of it all. This way you will have better luck with efforts to consolidate credit card debt. This is primarily because you will have less debt to consolidate, and fewer bills bleeding your bank account with high interest rates. Once you are successfully out of debt, your quality of life can really improve.