Your Option - Credit Card Debt Consolidation

As the economy struggles to rebound many people are forces to turn to credit card debt to make ends meet. From the payment of monthly bills to the purchasing of those luxury items that we just can't seem to resist, our credit card usage continues to intensify even in the face of mounting debt. Not surprisingly, many average consumers find themselves in the position of having to seek out credit card debt help so that they can find their financial footing once again. Depending upon your particular financial situation, a number of credit card debt help options are available to best meet your needs

Normally, when the average consumer thinks of credit card debt they think exclusively of credit card debt consolidation. While credit card debt consolidation - in traditional terms - is an option for controlling debt, the manner in which it is achieved may not be a viable alternative for those who are struggling financially. Credit card debt consolidation is normally achieved through a third loan - either an unsecured bank loan or a home equity loan. Such a loan will offer a lower interest rate than the consumer is currently paying on their credit cards and will allow the consumer to pay off their credit card debt and, instead, pay monthly to their new line of credit. However, getting such a loan requires that the consumer qualify financially - which may not be an option for those who are already in need of credit card debt help.

Debt Consolidation
You may have seen offers for debt consolidation loans recently. A major selling point of consolidation loans is convenience. Instead of paying multiple creditors who are charging different rates at different times of the month, you can potentially take out one big loan to pay off all your accounts.

The biggest myth about debt consolidation loans is that they're easy to get. While these loans may promise a low rate and no-hassle solution, many people in debt don't qualify for the advertised rate due to a high debt-to-income ratio or previous late payments on their credit report.

Even if you do qualify for one of these loans, it doesn't automatically translate to savings. Before you sign on the dotted line, be sure that the costs of the new, bundled loan will truly be less than what you're already paying various creditors. For many consolidation-loan candidates, their current credit woes mean they won't get the lowest-available interest rate. Plus, when there is nothing to secure the loan (such as your home), expect the lender to bump up the rate.

Debt Consolidation Loans
Offers for these financial products may show up in your mailbox or e-mail everyday suggesting this as the solution to your growing debt problem. A major selling point of consolidation loans is convenience. Instead of paying multiple creditors who are charging different rates at different times of the month, you can potentially take out one big loan to pay off all your accounts.

The biggest myth about debt consolidation loans is that they're easy to get. While these loans may promise a low rate and no-hassle solution, many people in debt don't qualify for the advertised rate due to a high debt-to-income ratio or previous late payments on their credit report.

Even if you do qualify for one of these loans, it doesn't automatically translate to savings. Before you sign on the dotted line, be sure that the costs of the new, bundled loan will truly be less than what you're already paying various creditors. For many consolidation-loan candidates, their current credit woes mean they won't get the lowest-available interest rate. Plus, when there is nothing to secure the loan (such as your home), expect the lender to bump up the rate.

Home Equity Loan or Line of Credit
Home equity loans or lines of credit are often advertised as a quick and easy way to get out of debt. By leveraging your home equity, the sales pitch goes, you can get money to pay off your debt and perhaps get a tax break as well

While this option can work for some debt-burdened homeowners, borrowing against your house can backfire. Although you may be reducing your credit card payments, you now have a larger mortgage payment, for a much longer period of time. Over the life of the loan with all the additional interest, you will end up paying back your original debt many times over. With these types of loans you are converting unsecured debts into secured debts which ultimately leads to the biggest risk for a homeowner. If you run into trouble again and have difficulty making the payments on the new loan, you could risk losing your home to foreclosure!

Balance Transfers
You probably got some offers in the mail today. Credit card companies offering you low or zero interest credit cards to help lower your debt. Maybe even some of you have tried it and are still in the same amount of debt or maybe even more.

What you may not know is that many credit card companies offer these rates as teasers - to lure you in to switch credit card vendors. Most of the time, these credit card companies target consumers with better credit. Just because you receive a pre-approved offer for a low rate balance transfer doesn't guarantee that the rate will be lower or that you will even be approved at all.

If you do qualify for a zero-percent or low interest rate, that promotional rate won't last forever. Most promotional rates increase significantly after 6 to 12 months which often leaves you once again with higher payments or struggling to find a new balance transfer offer.

Promotional interest rates only last if you pay on time. One late payment and the credit card company will hike up the rate. Also look for hidden fees and charges that can increase the actual cost of credit.

Overall, the balance transfer game is a short-term fix. Many people find themselves merely transferring balances from one new card to another before each promotional rate expires. Opening new credit card accounts every six months, however, could negatively affect your credit rating. Very soon, those new credit card offers you depended on might disappear.