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Credit Card Consolodation
Sylvia Said:What is the best debt consolodation company? I dont want it to hurt my credit. ;o)?
We Answered:The best consolidation company is yourself. You can do everything one of those places can with the right information and everything you need to repair your credit is at:
Best of Luck to you!
Miriam Said:I need a small loan of 10,000 but have bad credit. Who can I turn to who will help me?
We Answered:There are plenty of places that offer loans for people with bad credit with no-hassle applications and easy requirements.
Some of these lenders even offer 1 minute approvals, and have both secured and unsecured loans, depending on your need and situation. Check the page listed below, it has information and bad credit lenders listed off and on.
Ida Said:how does debt consolodation work...not credit cards, just past due bills....?
We Answered:Basically, you are getting a loan that pays off all of your bills, and then you make one payment a month on your new loan with interest. This can be good as long as you continue to pay any new bills that you recieve and don't get farther behind.
Carole Said:Debt consolodation or pay off credit cards one at a time?
We Answered:If you qualify for a consolidation loan through a bank with a lower interest (and fixed rate) that in itself will save you money; however, it is imperative that you pay off the cards and cut them up. You do not want to cancel those cards however. The reason not to cancel is that is where your credit history is and if you have $4,000 of credit limit and you get a $4,000 loan your credit limit total will be $8,000. The amount you are not using will lower your ratio of use to limit. That will help your credit score. Your credit score is made up of several factors: history, use to available, debt to income, and types of loans. That consolidation will be an installment loan while the credit cards are revolving. Yes... in your case it will help you in several ways. If you are even thinking about cancelling your credit cards and/or using them for other needs/wants, you will be asking for trouble.
Russell Said:Young and in small debt question. What is the best way to handle about 5,000.00 dollars in credit card debt ?
We Answered:I worked in banks for years (in the UK) - and credit cards are designed to get you into this way.
DO NOT go down debt management. Wrong path!
2 options - the best is to stay in contact with the debt agency, and if possible agree a repayment plan, and ask them to freeze the interest.
2nd option is as you suggested, take a small loan to repay - dont borrow any more than you need though.
Steer clear of credit cards in the future. I was a financial adviser for 5 years, and I dont have one!
Kathy Said:Credit Card Consolodation...there are soo many company's?
We Answered:Myth: Debt consolidation saves interest, and you have one smaller payment.
Truth: Debt consolidation is dangerous because you treat only the symptom.
Debt consolidation is nothing more than a "con" because you think you've done something about the debt problem. The debt is still there, as are the habits that caused it - you just moved it! You can't borrow your way out of debt. You can't get out of a hole by digging out the bottom. True debt help is not quick or easy.
Larry Burkett, noted financial author, says debt is not the problem; it is the symptom. I feel debt is the symptom of overspending and undersaving. Our certified counselors will not recommend debt consolidation for a client. Why? Because debt consolidation doesn't work.
Debt Consolidation Statistics
A friend of mine works for a debt consolidation firm whose internal statistics estimate that 78% of the time, after someone consolidates his credit card debt, the debt grows back. Why? He still doesn't have a game plan to either pay cash or not buy at all. He also hasn't saved for "unexpected events" which will also become debt.
Debt consolidation seems appealing because there is a lower interest rate on some of the debt and a lower payment. However, in almost every case we review, we find that the lower payment exists not because the rate is actually lower but because the term is extended. If you stay in debt longer, you get a lower payment, BUT if you stay in debt longer, you pay the lender more, which is why they are in the debt consolidation business.
Debt Consolidation Example
For example, let's say you have $30,000 in unsecured debt, including a 2-year loan for $10,000 at 12%, and a 4-year loan for $20,000 at 10%. Your monthly payment on the $10,000 loan is $517 and $583 on the $20,000 loan, for a total payment of $1,100 per month. The debt consolidation company tells you they have been able to lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the loans together into one. Sounds great, doesn't it? Who wouldn't want to pay $460 less per month in payments?
But they don't tell you that it will now take you 6 years to pay off the loan. This may not sound that bad to you at first unless you realize how much more you will actually pay in additional payments. You will now pay $46,080 to pay off the new loan vs. $40,392 for the original loans, even with the lower interest rate of 9%. This means you paid $5,688 more for the "lower payment". Not such a good deal after all. This example shows you why they are in the business - because they make money off of you.
Yvonne Said:Are consolodation loans worth the risk?
We Answered:Consolidation is a great idea if the interest rate is better than the one you currently have and the amount they are charging you for the consolidation is not too much.
I have never heard of a consolidation loan being bad for your credit in fact what I did hear is that it raised your FICO score by lowering your debt-to-income ratio.
Do the math before entering any type of loan and dont get in over your head. If you're going to have trouble making a bigger payment every month then forget it.
GOOD LUCK I hope I helped:)