Debt Consolidation: Do It With Care
By: David Horvath
The average American household today runs a minimum debt of $10,000 a large part of it in credit card dues. Living beyond means has obviously taken its toll. There is a sinking feeling that naturally comes over the mind of ordinary people who see friends and people around them go broke and see the inevitable happening to themselves when they see that whatever monthly payment is made towards the credit card dues gets adjusted only towards the interest and the principal amount remains the same.
In fact it grows month after month as any interest that remains unpaid is added up to the principal amount. Now, look at the problem on hand carefully and dispassionately. Certainly a situation like this can not be allowed to go on for ever. The fire should be put out now.
If you take a careful look at what interest rates you are paying for your credit card dues you would be astonished that it is a whopping twenty eight percent per annum. A consolidation loan could pay off your entire credit card debits at one go and it comes at a low interest of only 13% per annum. This works out to a cool saving of 15% on the rates and a significant reduction in your interest outgo on your monthly payment by as much as 60%. Those who have paid $1000 every month as monthly payments can now look to pay a small amount of $400 only. This not only leaves more money on your hand but also your financial position suddenly becomes robust.
Soon you can expect to become debt free. All this could happen with financial prudence and care. Care should be exercised in selecting the suitable lender who would provide the funds for extinguishing all your credit card dues in one go. Take care that you do not fall for low interest rates promises and end up paying over a very long duration a very heavy amount as interest. Care should be shown in properly paying the debt consolidation loan. Remember if the interest rate has got to be lower you have to provide collateral which might well be your house. If you do not take enough care in paying your monthly dues promptly you are in danger of loosing your house. The lender could take it anytime as his loan is fully secured.
Now a proper financial discipline should be maintained with respect to your credit cards. Their dues having been fully paid you might be tempted into thinking that you continue to spend as you like with your credit cards. If you are not careful again you may run into multiple debts. Only this time you would have nothing to pay them off and that will be the route to bankruptcy. Remember you are still in debt and your house is in stake. Carefully select a lender with clean records for your debt consolidation loan. Bargain for better terms and evaluate all options before you.
John Davis is a respected Debt Consolidation writer that writes for various business websites. He also runs an informational child bipolar disorder website that provides millions of helpful links and articles. To get more information goto Wizloans
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