Possible Solutions to Consolidate Debt

Filed by admin under Debt Consolidation — 11:48 pm
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Life is easy, especially with credit cards. However, once the credit cards become your everyday life, it could do more damage than you can afford. And when everything comes to worst, debt consolidation solutions seems to be the inevitable way to resolve all of your credit woes.

With the viability and convenience that credit card gives, almost 81% of the American households have at least one credit card. Sad to say, majority of them have more than $8,000 credit card debts. No wonder why many people are opting for some easy solutions through debt consolidations.

However, not all debt consolidations are deemed as perfect solutions for any credit problems. After analyzing id debt consolidation is the most appropriate solution to solve the problem, it is extremely important for a person to consider every solution before deciding to commit to it. To help you out, here is a list of some workable debt consolidation solutions and see for yourself the best solution that can work for you.

1. Balance transfers

To many, this is the easiest way to consolidate debts. Nearly 75% of credit card holders who have serious debts go for credit card balance transfers. This is when a person gets a new credit card and transfers all of his balances from his previous debts. In this way, the debtor gets to consolidate his debts into one by using the new credit card to pay off the balances.

However, it has its drawbacks. Most of the credit card companies that offer balance transfers with lower introductory period will eventually have higher rates once the introductory period is over. Hence, if not manage properly, it could do more harm than good.

2. Home equity loan

Getting a loan through home equity loan could temporarily solve the problem. With this method, you can get a loan to pay all of your debts, but it does not necessarily mean that you are already debt-free. What happened is that you have consolidated all of your debts into one debt.

One good thing about home equity loans is that it has lower interest rate. The only problem is that you are putting your house in great danger.

3. Life insurance

If you simply cannot find a better way to consolidate your debts, you can try tapping your life insurance. For most people who have whole life insurance, making use of its value can be a big help when trying to consolidate debts.

The best thing about this debt consolidation solution is that there is no restriction on the mode and time of the repayment.

Given all those few solutions for consolidating debts, it can be presumed that not all of these solutions could be your surefire means of getting out of debt. In reality, there are no nippy fixes for debt problems. The only long-term solution is to stay out of debt.

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Comments (2)

  1. Comment by Your Consolidation Loan Ltd — January 18, 2008 @ 1:19 am

    You also need to bear in mind that Consolidation Loans may not alwyas be the best option for certain individuals. If you cant afford to make repayments or if you have a bad credit history then some lenders will charge you even more on interest rates, putting you further in debt in the long run.
    Taking out a consolidation loan in certain situations can be a great help, if, and only if you can control your spending and if, and only if, you get rid of all that ‘plastic’ that may have got you into debt in the first place.

  2. Comment by Jonathan Clark — May 5, 2008 @ 10:53 am

    I so agree with you. I’ve had a number of students ask me similar questions and I love the way you put it. May I quote you or forward this blog to them?

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