How to Consolidate Your Credit Card Debts? A Beginner’s Guide

 

Do you have multiple credit cards, spend with them freely, struggle each month to make minimum payments, and are tired of dealing with financial problems that come after? Well, debt consolidation is what you must opt for.

Debt consolidation lets you escape from a financial quicksand. It organizes whatever money you owe in an affordable and manageable fashion. It works best for credit card debts, but you can also include other unsecured forms of debt such as personal loans, medical bills, and in rarest circumstances, student loans.

Mentioned below are a few ways to consolidate debts. Please check them out right now.

Debt Management Program

Debt management programs aim to decrease the interest on credit card debts and pave the way for a monthly payment that gets rid of debt in five years. The certified experts offering the best debt counseling services in South Africa said they evaluate your financial situation and advise which debt relief option can resolve your problem.

Pros

• A low-interest rate will lower your monthly payment and help you pay off the debt quickly.
• You can withdraw from debt management programs whenever you want.
• You stop getting calls from debt collectors.

Cons

• On missing a payment, the lenders will cancel all the concessions.
• You need to close all your credit card accounts.
• Your credit score will drop down in the first six months.

Home Equity Loan

Home equity loans enable you to borrow money as long you use your property as collateral. If you cannot repay the amount, the lender may foreclose on the property, probably costing you your home and the equity you have in there.

Pros

• The low monthly rate of interest.
• Fixed monthly payments.

Cons

• You may face foreclosure if you do not make payments on time.
• You need to prove your creditworthiness.
• You have to pay an application fee.

Personal Loans

The experts providing the best debt consolidation services in South Africa said personal loans consolidate debts by turning several balances into one monthly payment. These loans do not call for collateral and are available through credit unions, banks, and online lenders. You may even be able to get one from a friend or relative.

Pros

• You know exactly how much you have to pay.
• Personal loans are unsecured, so a lender cannot seize your assets if you fail to make payments.
• You can pre-qualify for the loan, and it does not hamper your credit rating.

Cons

• People with low credit scores have to pay high-interest rates. That negates the overall value of debt consolidation.
• Lenders ask for origination fees.
•    You cannot add fresh debt to your cards.

Debt consolidation agencies provide you with a wide range of choices, and you may feel overwhelmed. Well, it might be easier to decide which one is best by answering the following questions:
• Do I wish to risk losing my property to pay off credit card debts? If not, you must eliminate HELOC and home equity loans?
• Do I wish to take a loan to cover the credit card bills? If not, you must eliminate the personal loans as well.

Choose an option that ensures peace of mind and lets you feel comfortable while making the payments and dealing with the monetary obligations.


Location: 66 Main Rd, Claremont, Cape Town, 7708, South Africa

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