thinkaboutit asked:


Question? What makes people keep using them when they see the destruction it is causing?

Many people, mostly younger folks and women, have so many credit cards they end up in severe debt and ruin their credit for many years to come. Credit card applications are mailed out by the tons and people keep activating them knowing the interest rate is or will be up to 20% or higher. Everyone needs at least one credit card and no more than two. You also need one revolving (department store) credit card to establish a good credit history. The limit on the credit card(s) should be no more than 10% of your annual salary and the revolving card half that. Always make a minimum of a double payment on all your credit cards and pay on the due date. Never ever be even one day late. The interest rate and late fees will destroy you. If you are experiencing problems the first thing you need to do is carefully cut the cards up and throw them away. If you can not afford to pay the total monthly bill attempt to get a consolidation loan to get out of debt. The monthly payment will be less than the total monthly payment of all your cards with a much lower rate. Some banks and credit unions will be willing to help you out if they know why you are taking out the loan. Financial debt can create so much strain it can even destroy your peace of mind and your marriage. Don’t fall into that trap.

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Kristi Carter asked:


If you’re drowning in debt, you are definitely not alone. Millions of people around the world are having a hard time making their monthly payment obligations. Although some choose bankruptcy as a means of squashing debt, others are turning to lower interest rate or fixed interest rate debt consolidation loans to dig them out of the debt hole.

When you secure a debt consolidation loan, you basically combine all of your outstanding loans into one loan and then use that money to pay off your other obligations. Debt consolidation loans can be secured or unsecured. With a secured loan, you are required to put up an asset (like your home) as collateral. Then, if you ever default on the loan, you give the loan company permission to take back the asset to meet your loan obligation. In contrast, with an unsecured loan, you don’t offer any assets as collateral. The main difference between secured and unsecured loans is that secured loans have lower interest rates and more favorable terms because they are less risky to lenders.

The main benefit of debt consolidation loans is that they give you peace of mind and allow your payments to work harder for you. Consider this; if you have ten credit cards with various interest rates averaging about 28%, and you’re able to secure a debt consolidation loan for 15%, you’ll save more than 13% by consolidating. Now, that’s a serious savings!

When searching for a debt consolidation loan however, you have many options including local banks or credit unions, companies that send out mass mailers advertising and on line firms. The key to finding the best debt consolidation company is to carefully evaluate prospective companies before signing on the dotted line.

Here are some tips to help you find a great debt consolidation loan:

1. Beware of bad lenders. Not every debt consolidation company is legitimate. Some companies (predatory lenders) attempt to take advantage of consumers by charging extremely high fees for debt consolidation loans. Sometimes these lenders’ fees are so extreme that they resemble state maximum mortgage fees. Instead of choosing a company like this, seek out reputable companies that have a sound reputation, offer fair rates and aren’t fly-by-night firms. Make sure they don’t have any complaints with the Better Business Bureau and that they offer some safeguards for borrowers.

2. Ask for discounts or better terms. Many debt consolidation companies may be able to discount your loan. Always ask for lower interest rates and be willing to shop around for the best deal. By doing this, you’ll save yourself a ton of money.

3. Evaluate your options. Although debt consolidation loans can work great, you have to make sure that the interest you pay is worth it. That is, if you can secure a better deal by simply negotiating with your creditors, then that would be your best bet. They key is to evaluate your options carefully and do what is best for you and your individualized circumstances.

4. Read and understand your loan terms. Always read your terms to make sure that you understand your loan obligations. For instance, is the offered interest rate better than the ones that you previously pay? What are the payment terms? Do you have a locked or fixed rate? Will you be penalized for paying it off early? Understand the answers to these questions before you commit yourself to this particular company.

In conclusion, debt consolidation can be a wonderful option for those who are suffering financial hardship. However, you can’t just choose the first debt consolidation company that comes your way. Instead, you have to evaluate your options, do your homework, and read and understand your loan terms. Once you do, you may find that debt consolidation is an effective way to eliminate debt and relieve financial stress.



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