Are you dealing with multiple types of debt with varying payment dates and interest rates? Are you looking to tackle your Chase credit card debt, or any other type for that matter, head on but feel overwhelmed dealing with different debts and creditors?
Then consolidating your credit card debt may be right for you.
Consolidating credit card debt is when you merge most or all of your existing debts into one, either by taking out a person or consolidating loan. While the idea of taking out a loan when you’re in the thick of debt may be intimidating, sometimes it can be a smart strategy to pay off your debt in the long run. Keep reading on to see if this debt strategy is right for you.
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How Does Debt Consolidation Work?
While the idea of combining all of your debt into a single payment with one interest fee may be appealing, it can be nerve-wracking dealing with yet another financial hurdle when trying to pay off your debt. Fear not. This can be a smart strategy if you know what you’re doing.
One of the most attractive aspects of debt consolidation is having a single interest rate for all of your debt. This can be hugely beneficial when you’re dealing with multiple debts with varying interest rates. If you have particular debts that have interest rates that are through the roof, this is a good way to get those down which will save you money in the long run.
It can also be really helpful to only have a single payment date each month to pay off your debt. You won’t need to worry about remembering certain payment dates for various credit cards as debt consolidation allows you to make a single payment for all of your debts each month.
If you consolidate your credit card debt, you will merge all of the existing debt onto a single credit card (ideally with little to no interest). It’s important to read the terms and conditions of your debt consolidation plan. Make sure you do your homework to avoid paying more in the long run. Remember, this is meant to save you money and help you become debt free.
While credit card companies can suck people in with low introductory interest rates, make sure to find out if there are additional fees involved and find out how much you’ll be paying once the introductory period ends. While 36 months or another length of time may seem great for having no interest on your credit card, you will end up having to face the music once the initial period ends which can leave you with a bill much higher than you anticipated. This is why research is crucial at this stage.
Should I Consolidate My Debt?
If you’re looking to become debt free, then consolidating your credit card debt may be a wise choice. When you move all of your debts onto a single credit card, you have more flexibility each month when it comes to payments. Sure you can only pay the minimum amount required each month and be saddled with debt for a long time, or you can take advantage of the low interest rate provided when consolidating your debt and pay more than the minimum required each month. This is one of the best ways to get out of credit card debt.
If you are one of the very few people that have many debts with low interest rates, then maybe consolidating your debt isn’t right for you. For the majority of people, consolidating multiple debts is a smart financial decision as it helps them get rid of extortionate interest rates that leave them paying much more than what was originally borrowed.
Are There Any Downsides?
As with anything, it’s important to consider the negatives before pursuing a debt management strategy. While lots of people have great success consolidating their credit card debt, it is important to understand potential issues that could occur down the road.
As you’re dealing with a credit card, there is nearly always transfer fees involved. This can be a painful part of debt consolidation. This is why it’s important to use a credit card with up-front fees and transparent interest rates.
You should also only pursue consolidating your credit card debt if you’re serious about becoming debt free and can afford to make payments. You can be hit with hefty penalty charges if you miss your monthly payment, so it’s best to use this strategy when you have a consistent income and can afford payments. If you’re going through a financial hardship or serious life event, it may be best to hold off until you’re confident that you can make payments each month. Maybe you have a large debt with a company and you can’t commit to the minimum payments. We can help you understand more about Chase debt consolidation if you find yourself with a large amount owed and nowhere to turn.
The last con when it comes to debt consolidation is understanding that your credit card APR and limit may be based on your credit score. If you have a healthy credit score then you won’t have to worry about this, however, if you have a less than favorable credit score this may impact your ability to get a low interest credit card to consolidate your debt. It may be worth improving your credit before you choose to consolidate credit card debt so you can land a better rate. There are lots of websites out there that can help you find out your current credit score. If you find out that yours doesn’t look too great, there are lots of ways to improve your credit score. There’s always a solution – you just have to work hard to find it.
Become Debt Free
Everyone wants to live a life free of debt and worry. When you decide to face your credit card debt head on and work out strategies to overcome it, this is the first step in becoming financially free. If you’re thinking of consolidating your credit card debt in order to pay less in the long run and become debt free, it’s crucial that you do your homework ahead of time to make sure that you end up with a low interest credit card that works in your favor. It never hurts to explore your options, so do your research and find out whether or not consolidating your credit card debt could be right for you. It may just be the tool you needed to become debt free.