Stuck in the Never-Ending Credit Card Debt Cycle? Think Again.

Stuck in the Never-Ending Credit Card Debt Cycle? Think Again.

No matter how carefully you plan, life circumstances may land you in debt. A job loss or medical emergency can lead to hundreds of thousands of dollars of unpaid bills, or force you to rely on credit cards for daily expenses. If you have thousands of dollars of credit card debt or students loans, you are not alone! Most Americans owe $15,609 on average in credit card debt. If you feel overwhelmed by your debt, you have options. One of such option is credit card consolidation with a debt consolidation loan.

What is Credit Card Consolidation?

Credit card consolidation is a process in which a lender pays off all of your unsecured debts with a personal installment loan. You then owe the total amount to the new lender. This loan is set for a fixed amount, and a fixed number of payments until the balance is paid in full.

Online loans for debt consolidation have several advantages:

? You only have to pay one debt per month. This makes planning, organizing and repaying debt a lot easier.

? Getting all that old debt paid off via a personal loan can give a little boost to your credit score.

? Psychologically, feeling like you did something to get your debt under control can help you feel empowered and reduce depression or anxiety over your debt.

For these reasons, debt consolidation may be your best option. Just like anything else, you have to research and find the best option for your unique situation. That way, you can ensure that your debt consolidation helps you reach your financial goals. Consider the following situation:

Jack owes $25,000 in credit card debt on three different credit cards

Jack's Credit Cards

Balance

Credit Card #1

A low intro rate credit card that jumped to 17.9% after 6 months

$10,000

Credit Card #2

Credit Card #3

A store credit card that offered 0% intro financing. The balance wasn't paid and now it's skyrocketed to 24.9%

A reward card Jack had every intention of paying off each month to earn points

$3,000

$12,000

Rate

17.9%

24.9%

12%

Minimum $200

$65

Payment

$240

Total Interest

$8,516.48

$7,050.87

$4,273.76

Months until paid off

93 months

155 months

70 months

This $25,000 in credit card debt is costing Jack $505 a month, $19841.11 in interest, and it won't totally be paid off for almost 13 years! However, if Jack gets a personal (or debt consolidation) loan for five years with an interest rate of 7.5% APY, he will be paying approximately the same per month, but only $5,056.96 in interest. That's a savings of $14,784.14! I'm sure Jack (and you) have better things to do with that money.

Does it make sense for me?

For most people with "fair" credit (between 601 and 660 FICO score) or "good" credit (between 661 and 780 FICO score) who may be paying upwards of 20% APR on credit cards, a personal loan for debt consolidation makes sense. That's because they can qualify for a lower rate installment loan and have their debt paid off faster - within 3-5 years - and for good! Also, personal installment loans are available for up to $35,000! And there's no worrying about the rate changing, like with variable rate credit cards. You always know what you're paying each month. The best part? You can actually see your balance go down with each payment!

Also, many people with a large amount of credit card debt may have lower credit scores, and possibly have missed a payment or two. They may not think they qualify for this type of loan. However, these type of bad credit loans are available from online lenders and usually offer lower rates than you might think.

Why shouldn't I just transfer my balance to a lower rate credit card? I get those offers in the mail.

While this might sound like the ideal situation, they often can lead to higher payments and rates, and thus, more debt. This is because balance transfers often include an upfront fee. Also, if you happen to miss a payment, the rate can go to the default rate which can be higher than your original rate from the balances you transferred in the first place!

I want to know more!

Shop around for the best online loans. Not all debt consolidation companies are alike. You'll want to get at least three quotes so that you can compare interest rates and figure out how much you're going to be spending overall.

Feeling overwhelmed? You can use an online concierge service to find the best option for you. They can compare rates and find the best loan term for your situation. Also, by doing a simple online search for "credit card consolidation," "debt consolidation," or "personal installment loans," you can see various options for these online lenders. Many of these online loan providers list their minimum requirements and rates on their websites, so you know where you stand right away.

Credit card consolidation can help empower you to break the credit card debt cycle. If you do it properly, you can save a lot of money. Just make sure that you make the best choice for your situation to help you get - and stay out - of debt!

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