Reduce Debt Fast With Credit Card Debt Consolidation

Credit card debt consolidation is a popular debt consolidation method. Unlike other debt relief strategies, credit card debt consolidation does not require the debtor having to miss their monthly repayments. This means that the debtor is unlikely to have their credit rating downgraded. However, while credit card debt consolidation has some great positives, it does of course have some noticeable negatives which require due consideration prior to embarking upon a credit card debt consolidation program.

So What Aare the Advantages of Credit Card Debt Consolidation?

Credit card debt consolidation plans require the debtor to join a Debt Management Plan (DMP). The debt management company then negotiates with their client’s creditors, the aim being to reduce interest rates and fees. So for example if a credit card debtor has say 3 credit cards with an average debt interest rate of 18%, by the end of the negotiation process this rate may well be brought down to a more reasonable figure, such as maybe 12% or so. This interest rate downgrading brings about a reduced monthly payments and a shorter payback timeframe.

Furthermore, with debt consolidation, it has the added advantage of having none of the usual debt reduction risks attached, such as credit rating downgrading or court cases.

Also, credit card debt consolidation has one striking advantage over and above the other popular debt consolidation methodology. What is this alternative? Why its credit card debt consolidation loan of course. While popular, and apparently similar, at the end of the day the credit card debt consolidation loan is a loan. If you default on the loan it becomes another outstanding debt which you have to pay back. Whereas the DMP is a monthly plan which you can leave at any time.
Furthermore, many credit card debtors default on debt consolidation loans because of the ease with which these loans can be acquired. For credit card debt consolidation to be truly effective as a means of debt relief requires the debtor to bear in mind the reality of the debt relief program.
This is a second advantage which credit card debt consolidation plan has over and above a credit card debt consolidation loan. Because, at least with a credit card debt consolidation program the debtor is aware that they have a debt problem and that they need to make substantial lifestyle changes in order to recover from it. Whereas, with a debt consolidation loan it is all too easy for the debtor to forget about their debt problem. Until of course the credit card debts begin to rack up once again, at which stage they end up back at stage one. However, this time they have the added debt of a credit card debt consolidation loan to service as well as the credit cards themselves.

The Disadvantages of Credit Card Debt Consolidation

Like every debt reduction methodology, credit card debt consolidation has several negative points. Firstly the debtor has to trust their money to an external agency, which disperses the monthly payments to the debtors various creditors.

While this is fine, it is only good so long as the debt relief organization pays the debtor’s credit card bills on time. Because some debt relief companies are sloppy in the way that they handle the DMP, and in severe cases it can result in a downgrading of the debtors credit rating. As the DMP is an on-going process, it is vital to monitor the process on a monthly basis.

A final potential downside of a credit card debt consolidation program is that it requires the debtor to pay out on a monthly basis. This is only good if the debtor can afford to make those monthly repayments. This is an important clarification point between credit card debt consolidations versus the more radical debt reduction methodologies, such as credit card debt settlement and bankruptcy.

This is an important point. If a debtor joins a credit card debt relief program, without taking into consideration their ability to make the repayments, they might end up end up defaulting. This brings them right back to square one again.

Putting It Together - Is a Credit Card Debt Consolidation
Program the Best Debt Relief Option for You?

Credit card debt consolidation is a great debt relief option, which has many advantages over and above credit card debt settlement and bankruptcy. However it does require that the debtor do their homework and make sure that the DMP is appropriate for their needs and that they select the right debt relief company to handle their case. Finally, it requires that the debtor follow up on a monthly basis in order to make sure that the DMP is progressing as planned.

If you have taken the time out to do your due diligence, and have come to the conclusion that credit card debt consolidation is the best option for your needs, then go ahead and sign up today. When properly managed, credit card debt consolidations plan can be a highly effective debt reduction option.