Despite the fact that reports indicate more consumers are paying down their credit card debt, there is still the problem for many of having more debt than they can repay due to credit card use. While many credit cardholders are able to make minimum monthly payments on their cards, interest rates that continue to build on the overall cost that a cardholder must pay often causes trouble and can hurt a cardholder’s financial life if payments are missed or a cardholder must default.
For this reason, many cardholders turned to credit card consolidation loans in the hopes of gaining some form of control over their credit card debt. While credit card consolidation loans can be available to almost any cardholder, even bad credit borrowers in some cases, there is a debate over whether consolidating credit card debt will be the most affordable and effective way of erasing what is owed.
Consolidation loans are attractive to many credit cardholders simply because they come with one monthly payment and one interest rate. Cardholders see this as preferable to multiple credit card payments and multiple interest rates but there are financial counselors who say that paying off credit card debt separately may take a shorter amount of time and cost less overall.
Cardholders who can meet these multiple payment may be able to pay off their credit card debts in a timely manner simply because they can erase these smaller credit card debts faster than if they consolidate and must deal with one large principle. Also, cardholders that belief only having one interest rate on a consolidation loan can be easier to handle often forget that with a higher principle amount on a consolidation loan, this interest rate can build and costs may be higher once a consolidation loan is repaid.
While it will be dependent upon the cardholder’s personal financial situation and their ability to repay their credit card debt separately, many financial advisers often prompt credit cardholders to look into both repayment options to see which one will be best for them. Some cardholders can attack their credit card debts one by one and erase their debts fast, but some may need a consolidation loan in order to avoid missing payments.
For cardholders who have worried over the additional costs that may come from a consolidation loan, they have simply paid more than their minimum monthly payment on their loan in order to avoid excessive costs. Essentially, cardholders who have effectively paid off their credit card debt over the past months have simply formed a plan that was affordable for them and kept an eye on their interest rate or rates and their repayment time period.