How to Choose a Credit Card Consolidation Loan

Dealing with credit card debt is never a walk in the park, but when you have the right resources and knowledge, getting rid of it can quickly become a thing of the past. You will find plenty of debt consolidation loan commercials on TV, find brochures at your bank and find ads online and in your email inbox. But are they all the same? How do you choose between one credit card consolidation loan from the next? With a credit consolidation loan, you will be able to pay off your credit card debt, but you'll find that there are different amounts you can borrow, repayment periods and interest rates associated with them. Let's take a look into how you can choose the best one for you.

Find Out the Interest Rate of the Loan 

The first thing that you should do before applying for a credit card consolidation loan is to learn of the interest rates associated with it. This will determine how much you will have to pay over the duration of the loan. Obviously, the higher the interest rate, the higher your monthly payments will be. You'll need to ensure that you're getting the best rates and that you can afford it. You can do this by shopping around to see who has a low interest rate. Keep in mind that you may not qualify for a loan with a low interest rate because of your bad credit score.

Do You Quality for a Consolidation Loan?

When you fall behind on your credit card payments, your credit rating will suffer tremendously. This means that it could be difficult or impossible to get a credit card consolidation loan. A lot of lenders won't allow bad credit borrowers to take out a loan to pay off secured debt, such as a mortgage or auto loan.

Is it a Consolidation Loan or Credit Counseling?

Don't get confused when looking around for credit card debt help. You will find that some credit card consolidation programs work more like a credit counseling program, where it will take all of your credit card debt and combine them into one, allowing you to pay only one monthly payment. Make sure to ask whether your debts will be paid off right away or over an extended period of time.

Find Out the Repayment Period

When you get a credit card consolidation loan, the monthly payments are lengthened over a specific time period. This means that it will take you longer to pay off all of your credit card debt. However, your monthly payments are much lower, making them more affordable. This is good for those who need to get their finances back in order. Then once you're back on track, you can start paying back the loan quicker.

Considering Alternatives

Credit card debt consolidation is only one way to handle your credit card debt. You should figure out if a consolidation loan would be best for your situation. Otherwise, you can find other financial services like credit counseling, which is sometimes a better option. Some people even try to put together their own debt repayment plan, but you will need to have great discipline to do this by yourself.

Is the Credit Card Consolidation Lender Legit?

You don't want to fall for the many gimmicks that are out there. Be sure that the lender you are considering is indeed legitimate. This can be done by avoiding companies that request upfront fees to be paid for a secured loan. If things seem fishy, trust your gut feeling and go elsewhere.

 

Lastly, you want to make sure that you're able to afford the credit card consolidation loan, so don't forget to factor that in.