Debit Consolidation Advice

Credit Card Debit Consolidation
First things first – cut up all your credit cards. You’ll never get out of debit if you keep spending money you don’t have. And that’s really what this is about, isn’t it? Setting a budget and living by it. Don’t get a debit consolidation loan just to go into more debit that you can’t pay. It’s a viscous circle, and you don’t want to be caught up in it. Bottom line – don’t even think about debit consolidation for your credit cards unless you’re ready to change your spending habits and live on a budget.

Controlling Credit Card Debit
When you use credit cards, you are borrowing money. And borrowing money means you’re paying interest on it. There’s no such thing as a free lunch, right? Well, mostly. There are some lunches in the debit repayment world that are free – for a time. If you have a credit card debit with high interest rates, think about trying to find a zero percent interest card that you can transfer it to, and make sure the fees are low or non existent. This is the easiest form of debit consolidation that you can pursue, and it’s probably one of the most effective. Eliminating the interest that you’re paying on a credit card makes the payment that you are making that much more effectively. Think about it – a credit card at 10% interest (and that’s fairly low) with a $10,000 balance costs you almost $100 a month. If you transfer the balance onto a zero percent interest promotional card, you’re buying yourself another $100 per month. Multiply that by two or three cards, and you’re talking real money. It’s debit consolidation at its best.

Using your HELOC for Debit Consolidation
This is only something you should pursue if you’re willing to change your spending habits for good – and I mean you’re absolutely dedicated to it. Using your home equity line of credit as a debit consolidation loan can save you some significant money, but also put you at significant risk. What you’re doing is transferring unsecured, high-interest debit into a lower interest, secured debit. This is known as securitization. Remember, when you do this you’re agreeing to sell the asset that you have secured your debit with in the event that you can’t repay the debit. In the case of debit consolidation with your HELOC, that means your house! You can see where this can get very, very dangerous. Think about it – it shouldn’t taken lightly.

Debit Consolidation Companies
This is a company that SHOULD help you negotiate with your lenders for lower rates, principle relief, and repayment plans. I say should, because they don’t always do so. Look for a lender that will work with you on a plan that you’re comfortable with. Don’t be afraid to ask questions, and make sure you understand everything that’s going on before you commit to any courses of action.

What is Debit Consolidation?

Debit consolidation is the practice of taking many loans and combining them into one, lower interest rate loan. This can be done to lower payments or simply to gain the convenience of dealing with only one company when making payments.

Debit consolidation can involve either secured or unsecured loans. In some instances, the borrower uses their house as collateral to combine many unsecured debits into a lower interest rate secured loan. This is referred to as collateralization. Keep in mind, when you take this route to consolidate your debit, you are legally obligated to sell the collateral if you cannot pay back the loan. This is commonly referred to as foreclosure.

In other scenarios, a debit consolidation company will buy at-risk debit from the lending company at a discount. A good debit consolidation company will attempt to pass some of these savings on to their customers. Unscrupulous ones will not.

Often, companies will attempt to charge very high fees when offering debit consolidation loans - sometimes the maximum allowed by the state. Be wary of these companies, and also avoid waiting until the last minute to consolidate your debit. You may not have time to shop around to find an honest company and be forced to accept usurious rates from a predatory lender.

The basic rules of debit consolidation are simple: don't wait till the last minute and don't use something as collateral that you can't live without.