When financial conditions begin to get tough and you find yourself facing difficulty making your payments, you may yourself needing to turn to a debt consolidation arrangement in order to ensure that you don't drown in a sea of late payments and bad debt. These types of loans are available, and you may have to decide between an unsecured debt consolidation loan and a loan that is secured by equity in a major asset you own, such as your home or a late model vehicle. Whichever you choose, you should take care to ensure that you have a complete understanding of your agreements and responsibilities.
"We're seeing more and more people looking at an unsecured debt consolidation loan as a way to help them find a solution to their financial difficulties," says business writer and financial analyst Carl Walins. "A restructuring of your debt using a loan may be a good choice, but you must consider the differences between an unsecured debt consolidation loan and one that is secured with something of value, such as the equity in your home. You may find that the loan parameters vary widely, even from the same lender, depending on whether or not you choose a secured or an unsecured debt consolidation loan".
Walins warns consumers to read their loan agreements carefully before signing off on a debt consolidation loan. While stress over making your monthly payments may make you eager to close your loan and to ease the burden of your debts, it is very important that you have a complete understanding of all of the terms surrounding your secured or unsecured debt consolidation loan. There may be conditions that affect your interest rate or fees that could be incurred if you should not comply with the precise requirements of the agreement. For instance, you may be subject to fees for pre-payment or early payoff of your loan balance. In such cases, it would be imprudent for you to pay off your secured or unsecured debt consolidation loan early and incur a penalty that could be greater than the amount of interest accrued on a monthly basis.
"Whenever you enter into a financial agreement you should always take care to read and understand the details of your contract before you sign it," Walins reminds us. "If you have access to a financial advisor or an attorney, you may want to ask them to review the documents before you sign in order to make sure there are no hidden 'gotchas' that could come back to haunt you later".
Whether you decide to choose a secured or unsecured debt consolidation loan as a vehicle to help you reduce your monthly financial burden, you should take great care and diligence to make certain you have a complete understanding of the terms of your loan before you sign the documents.
Monday, October 17, 2011
Tuesday, October 4, 2011
One Simple Way of Consolidating Credit Card Debt
Debt is something that has to be managed, and can basically get out of control if you are not cautious. Credit card debt in particular is among the most burdensome financial issues for consumers today, and consequently millions of credit card customers are looking for ways of consolidating credit card debt as a way to better manage their financial duties. While it is important to receive a lovely handle on your credit card accounts and make positive that you haven't extended yourself beyond your means, consolidating credit card debt itself can sometimes generate even more financial hardship in case you don't take great care in the way you approach this significant financial issue.
A very common form for consolidating credit card debt is to transfer the balances of your higher rate cards to a credit card that has a lower annual rate of interest. For example, you may have or credit cards with balances of a few hundred (or few thousand) dollars each, and those cards may carryover an annual rate of interest of 17 percent, 18 percent, twenty percent, or even more. Obviously you ought to be able to save a significant amount of funds each year in interest by moving those balances to a card that carries a lower rate of interest. For example, you may be able to transfer the balances of those higher-rate cards to a different card that carries only a 13.5 percent rate of interest. Even on a balance that is currently being charged only a few percentage points higher, such as 17 percent, you will save significant actual dollars -- definitely to think about this as a process for consolidating credit card debt.
But hold on second. Before you immediately transfer that balance, there's lots of pitfalls that you may overlook when consolidating credit card debt in this fashion, and it is important to think about them before you move your funds:
The "teaser" rate:
Some credit cards offering lower rates of interest may only offer them as a "teaser" or introductory rate. That means the credit card's annual percentage rate may increase at some point in the future, when the teaser rate expires. You ought to check carefully to make positive that you understand exactly what the rate will be in the future as you pay down the balance you transferred from the original card.
The "empty card" syndrome:
Consolidating credit card debt by moving balances to a lower-rate credit card is feasible way to economize on interest, but beware the hazardous pitfalls of teaser rates and empty card syndrome. Credit and debt must be managed wisely, or you may find yourself in serious financial trouble.
If it turns out that consolidating credit card debt by moving the existing balances to a lower-rate card will work well for you, then you require to make positive you have a plan to deal with the higher-rate card that will suddenly have a zero balance. often people can fall victim to the "empty card" syndrome and find themselves charging things again on that newly empty card, because it's no balance and it offers a convenient payment process. In case you fall victim to this mentality, then you may find yourself right back where you started in no time. In lieu, put that card away in a place where you are not likely to make use of it, unless faced with a serious emergency. Otherwise, your decision to attempt consolidating credit card debt and saving yourself some funds in interest may come back to haunt you.
A very common form for consolidating credit card debt is to transfer the balances of your higher rate cards to a credit card that has a lower annual rate of interest. For example, you may have or credit cards with balances of a few hundred (or few thousand) dollars each, and those cards may carryover an annual rate of interest of 17 percent, 18 percent, twenty percent, or even more. Obviously you ought to be able to save a significant amount of funds each year in interest by moving those balances to a card that carries a lower rate of interest. For example, you may be able to transfer the balances of those higher-rate cards to a different card that carries only a 13.5 percent rate of interest. Even on a balance that is currently being charged only a few percentage points higher, such as 17 percent, you will save significant actual dollars -- definitely to think about this as a process for consolidating credit card debt.
But hold on second. Before you immediately transfer that balance, there's lots of pitfalls that you may overlook when consolidating credit card debt in this fashion, and it is important to think about them before you move your funds:
The "teaser" rate:
Some credit cards offering lower rates of interest may only offer them as a "teaser" or introductory rate. That means the credit card's annual percentage rate may increase at some point in the future, when the teaser rate expires. You ought to check carefully to make positive that you understand exactly what the rate will be in the future as you pay down the balance you transferred from the original card.
The "empty card" syndrome:
Consolidating credit card debt by moving balances to a lower-rate credit card is feasible way to economize on interest, but beware the hazardous pitfalls of teaser rates and empty card syndrome. Credit and debt must be managed wisely, or you may find yourself in serious financial trouble.
If it turns out that consolidating credit card debt by moving the existing balances to a lower-rate card will work well for you, then you require to make positive you have a plan to deal with the higher-rate card that will suddenly have a zero balance. often people can fall victim to the "empty card" syndrome and find themselves charging things again on that newly empty card, because it's no balance and it offers a convenient payment process. In case you fall victim to this mentality, then you may find yourself right back where you started in no time. In lieu, put that card away in a place where you are not likely to make use of it, unless faced with a serious emergency. Otherwise, your decision to attempt consolidating credit card debt and saving yourself some funds in interest may come back to haunt you.
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