If you are in debt to the point where a large portion of your monthly income is being used to make credit card payments, you may want to consider getting a consolidated loan. This is the type of loan where a lender will pay off your credit cards, and then you will make a single monthly payment to that lender instead of several payments to many credit card companies. There a several reasons to consider this type of loan.
1. You will have extra money
The single payment you will make each month will be lower than the sum of all of the monthly credit card payments you are making now. This will give you some breathing room and allow you to have a little extra money. Not having the stress of living on the razor's edge of paying your bills will make life more enjoyable. And when a time comes that an unforeseen expense appears, you will have a little extra cash to pay for it.
2. You will pay off your debt
The biggest problem with revolving credit, the type that exists with credit cards, is that the amount that you are paying for interest each month is a high percentage of the monthly payment. When you only make the minimum payment, you will be making very little progress paying off your debt. All you are doing is paying lots of interest to the credit card companies. A consolidation loan is a closed-end loan. This means that you will make a specific number of payments, and the loan will be paid off. At this time you will be debt free.
3. It may help prevent a bankruptcy
Once you begin to miss a payment or two and are accessed late fees, you can go over your credit limit and may never be able to get back under that limit. The payment needed to bring your account under the limit may be too great. This will lead to having your account suspended. This may end up repeating for other accounts, and this, in turn, can lead to a downward spiral in your finances that ends with a bankruptcy. Even if you have made a few late payments, it is easier to repair this type of credit than a bankruptcy. A bankruptcy will affect your finances for many years.
Getting a consolidated loan means having no more credit card debt and having a single loan to pay back. Naturally, you will need to learn to pay as you go and forego any more purchases on credit. Learning to live within your means will provide great dividends to your finances down the road, as well as your character.
For more information, contact a company like American Cash Advance and Title Loan today.Share