Without any doubt, many consumers are considering credit cards consolidation loans to lessen or totally eliminate their credit card debt. It is ironical that the many benefits of using credit cards have caused consumers fall into the trap of being heavily indebted.
The worst part of it is that this indebtedness is becoming more and more unmanageable, especially if you have limited funds. Actually, there are several alternatives that you can use to help you eradicate your indebtedness.
However, obtaining a consolidation loan is perceived by many as the best alternative to eliminate credit card debt. Why is this so?
Many consumers believe that consolidating all their card debt into one single loan is easier to manage and more convenient than trying to work on several accounts.
All About Credit Cards Consolidation Loans
There are two types of credit cards consolidation loans; the secured consolidation loans and the unsecured consolidation loans.
Unsecured consolidation loans, unfortunately, are now difficult to obtain. The current financial situation worldwide has made the criteria to qualify for this type of consolidation loan to become stricter. Consumers often are not able to acquire the loan because of lack of qualification.
Some of the qualifications include: an exceptional credit score, proof of income to ascertain that you can afford to take a loan, proof that your employment is stable, and many more.
People having problems with their credit card debt is more likely have a low credit score that can easily disqualify them for an unsecured consolidation loan.
On the other hand, secured consolidation loans are the opposite because they are readily available as long as you can provide collateral. But, if you do not manage well this type of loan, you will likely be out of your house!
Typically, the collateral used for a secured consolidation loan is real estate properties such as land and houses. Also, the interest rate for your loan will depend on the value of your collateral.
Where You Can Get Credit Cards Consolidation Loans
Commonly, there are two possible sources for credit cards consolidation loans that you can choose from. You can either obtain the loan from a bank or a credit card company.
Credit card companies usually offer lower interest rate if your credit history is fairly good. You may have fall short with your current credit card standing, but if you have been a good payer before this indebtedness, credit card companies may give you a lower rate for your loan.
Banks are sometimes the best source of consolidation loans because often, their interest rates for loans are lower than that of credit card companies. However, they will likely provide the loan if you have a collateral.
Also, your creditworthiness is a big factor when obtaining a consolidation loan from banks. If your creditworthiness is fair enough, you may most likely be qualified for the loan.
Where is the best to get the loan? It will all depend on your qualifications and your needs. If you have collateral, it is better to go to a bank and enjoy a lower interest rate. But, if you want to take advantage of the many offerings of credit card companies, you can choose them over a bank.
The foremost benefit of a consolidation loan is the convenience of paying only a single account and lower rate of interest. The downside is a longer period for repayment.
Therefore, even if you pay a lower interest rate, in the long run you are paying more because the loan is long-termed. However, if you are having problems with updated multiple payments, and then credit card consolidation loans are your best choices.