What is Credit Consolidation?

There’s no shame in not knowing financial jargon or not being sure how certain concepts work in the financial world. If you’ve never encountered certain situations, then you haven’t been exposed to it.

So, if you’ve ever wanted to ask, “What is credit consolidation?” but were too afraid to ask, you’ve come to the right place.

Perhaps you feel overwhelmed by the amount of money you owe on various credit cards. Minimum monthly payments may be hard to make, or they may not move the needle much on your total debt owed.

If you’ve found yourself dreading your monthly credit card payments, you may have become curious about credit consolidation.

Here’s a brief explanation of what it is and how it can be used to help you dig out from under debt in a responsible way. We’ll also take a look at reviews of some of the most well-known credit consolidation companies and look at personal loans that could potentially help solve your debt problems.

Credit consolidation is also referred to as debt consolidation. It’s a program designed to transfer all your credit card balances to one lender, with the goal of reducing your interest rate to one manageable annual percentage fee.

The benefit of this service is that it streamlines your debt payments to take place in one lump sum each month. You don’t have to track down various payment dates and amounts.

You can sometimes also lessen the total interest paid, as many programs offer interest rates lower than what you’ve likely been paying through individual credit accounts. This means a shorter payoff time for your total debt and less financial clutter.

As you would imagine, no two debt consolidation companies are created equal. You should carefully consider a company’s BBB rating, reputation, and record of results before committing your credit accounts to their care.

It’s a good idea to comparison shop when choosing a credit consolidation company. Check review sites to determine each company’s reputation and ensure they have a long and successful track record.

Compare costs to find the most favorable terms and to avoid hidden fees. Ensure the company provides the specific services you require. Look for robust customer service and support that will be available when you need it on the terms you desire.

Finding a good fit with a credit consolidation company can make the difference between improving your finances and accepting the status quo. It pays to spend time getting it right.

Traditional debt consolidation is a solid choice for getting your debt under control, but it’s not for everyone. If you would like to keep your credit accounts and the benefits that come with them, you may wish to take out a personal loan with a low interest rate and use it to pay off your credit accounts.

A personal loan has the added benefit of giving you full control of your accounts, payments, and negotiations with lenders. This option is not intended for someone with a hard time-making payments. It is up to you to apply the funds from your new loan to your credit accounts. There is the potential to get further into debt if you’re not careful.

There are plenty of nonprofits that provide credit consolidation for those with credit card debt.

While these programs can cost less than a for-profit company, this is not always the case. Some companies will add a monthly service fee to your payments, an upfront activation fee, or require a donation made to a nonprofit charity for their overhead fees.

These companies can cost as much as a for-profit when all fees and charges are figured in.

With so many choices available for getting your credit accounts paid off, it can seem like your debt troubles are temporary. With proper changes to your financial habits, this is a possibility! Many who complete a credit consolidation program can maintain healthy spending habits for a lifetime, and are able to begin using credit again after they have completed the program.

It’s vital, however, that you take a good look at how you got into heavy debt in the first place. Use those lessons to change future behaviors, stick to a budget, and start a new journey that uses credit wisely. Enlist the help of a financial planner or another money expert, if needed, until those changes become a habit.