Consolidate Credit Card Debt - When Does This Solution Work? When Will it Not Work?

Added: (Thu Apr 22 2010)

Pressbox (Press Release) -
Is debt consolidation even a debt relief option? Or is it merely an administrative procedure that helps you manage your paper work better? Well, it all depends on the answer to one question-what is the percent of discount that the credit card issuers prepared to offer after you go in for consolidation loan.

If you get a 5% discount on the total amount owed, that would be a good deal and you would actually enjoy a reduction in the debt owed. However, if the credit card issuer is offering a 1% discount, it is obvious that the total benefits that you enjoy will not be very high. In such a scenario, the entire transaction will be restricted to just administrative efficiency.

Hence, it is very important to know when to going for a consolidation loan. If you are expecting high benefits, then you must try and negotiate the highest discount percentage possible. However, you can be rest assured that you will not be enjoying a 50% or 60% discount on the total amount owed. That is just not the way consolidation works.

Hence, if you have accumulated credit card debt that is far beyond your capacity to repay, consolidation will not work. When you need to go out and strike home runs, stealing bases is not going to work. That is exactly what you should keep in mind when you are tackling credit card debt problems.

The solution will work perfectly when you are finding it difficult to keep track of the total repayments you make because of the large number of credit cards you owe. When you have many unsecured and secured loans on your hand, it is very important to keep track of all the transactions in a proper manner.

When you do not remember which transaction was charged to which account and when you have no idea which account should be repaid first, it is time to go in for consolidation.

If you are near bankruptcy and if you have a low credit score, it is obvious that consolidation will not work for you. This is because the lender should be prepared to offer a single loan that will be used to repay all your existing debts.

If you owe $5000 each on 10 credit cards, you need a lender will be prepared to offer at least $45,000 to $48,000 as an unsecured loan. It is obvious that you will need a high credit score to qualify for the loan.

If you do not have a score, you will have to pay more interest. That will defeat the entire purpose of the consolidation. The basic idea is to make it cheaper and easier to service the loan. If that is not done, you might as well continue using multiple credit cards and repay all the accounts simultaneously.

If you are over $10k in unsecured debt it would be financially prudent for you to consider a debt settlement. There are organizations that exist called "Free Debt Relief Networks" that are a great place to start in locating legitimate debt settlement companies in your region. They provide free debt help and know where to locate the top performing debt settlement firms. To get free debt help check out the link below:


Free Debt Advice
(http://www.DebtBankrupt.com)




contact us for free debt advice = 8883613619