Multiple Credit Card Debt Consolidation Loans–Can Consumers Avoid Defaulting By Consolidating?

Some consumers who have multiple credit card debt obligations have turned to credit card consolidation loans as a way to avoid defaulting on these forms of unsecured debt. While there have been countless cardholders who have been unable to repay their credit card debt obligations over the past months, as a result of trouble in their financial life, there are those who are attempting to consolidate credit card debt to make monthly payments more manageable.

One of the main draws to credit card debt consolidation loans has simply been that a cardholder will only have to pay one payment each month and combat one interest rate. Understandably, cardholders who have multiple credit card debts may have a higher overall payment total each month, but with a debt consolidation loan, this credit card repayment amount may become less burdensome.

However, financial advisers often warn cardholders against using credit card debt consolidation loans as a way to handle their credit card obligations. There are numerous financial advisers who feel that by formulating a repayment plan where credit card debts are combated separately, from either the lowest amount to the highest or the highest interest rate to the lowest, cardholders stand a better chance at erasing these debts at a lower cost.

Even if a cardholder has been able to obtain a low interest rate on a credit card debt consolidation loan, the higher principal amount and longer repayment time frame will cause costs to rise in the majority of cases. There have been some cardholders who have combated this problem by simply focusing as much money as they can towards this consolidation loan each month, but for individuals in a bad financial position, this may not be possible.

Again, advisers who suggest cardholders find alternative ways to combat their credit card debts do so because they feel that, in the majority of cases, cardholders will pay much more through a consolidation loan than repaying debt separately. While this may not true for every credit card debt situation, consolidations do usually bring higher overall costs. Yet, credit cardholders who fear they may miss payments or do damage to their credit score have often been willing to take these added costs simply to keep their credit score and history from taking a turn in a negative direction.

On the other hand, cardholders who feel credit card consolidation loans are their only option are often advised to shop around so that they can at least get the most affordable consolidation plan available and avoid excessive costs which may be associated with credit card debt consolidation loans that have a higher interest rate.