Author: Sean Masterson Added: October 28, 2008
Credit card debt consolidation is becoming an increasingly-common topic of interest. With more and more families struggling to make ends meet, we're all trying to find ways to reduce monthly expenses. Before you jump into any consolidation program, however, there are some things you need to consider. 1. Don't Go Jump into A Home Equity Loan A home equity loan may once have been a great way to consolidate debt, but that's no longer the case. While a home equity loan may carry a lower interest rate than what your credit card currently does, your credit card debt is an unsecured debt and a home equity loan is not. If, for some reason, you can no longer make your credit card payments your credit rating will indeed take a hit. If, however, you use a home equity loan for credit card debt consolidation and then can't make those payments, you're going to lose your home. 2. Be Wary of Pie-in-the-Sky Promises There are companies out there promising that you can pay off all your debt for pennies on the dollar. Don't fall into the trap. These services are not offering credit card debt consolidation. When you see a company offering to eliminate your credit card debt for just a fraction of what you owe, they're talking about debt settlement. Debt settlement is not the same as consolidation. Your credit will be affected and you may be responsible for paying taxes for any of the debt the credit card company forgives. 3. It Won't Help if You Don't Make Changes The most important thing to remember about credit card debt consolidation is that it won't help if you pay off your debt and then max out your cards again. You need to change your spending habits and understand how you got to this point in the first place. Many credit card debt consolidation services offer budget planning and credit counseling for consumers who enroll in their programs. Take advantage of these offerings if you want to avoid ending up back at square one. They can teach you what, and what not, to do in order to maintain healthy finances. If you really want to secure your financial future, getting a handle on your debt is the place to start. Credit card debt consolidation is a means to that end. Make sure you keep the above three tips in mind when pursuing this avenue of financial reparation.
--- For more tips on credit card debt, including saving money and avoiding getting taken, check out CreditCardWhizKid.com, a website that specializes in providing credit card tips, advice and resources.
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