The Federal Reserve stated that consumer debt, specifically credit card balances, decreased in the month of July but we are still seeing situations where there are consumers who may be relying on their credit card as a way to meet certain costs, particularly necessities, which may be setting the stage for financial distress. Since unemployment remains quite high, standing at 9.1%, consumers are looking for ways to combat their debt in an affordable manner, and for some this usually comes in the form of consolidation.
Consolidation loans or credit cards that offer balance transfer consolidation opportunities are usually seen to be helpful for consumers is simply because they offer an affordable monthly payment, when the conditions are right, that may be less than the totality of a consumer’s debts when they are separate. While the average rates on balance transfer credit cards that can offer consolidation options currently stands between 12% to 16% here in September, but the rate that a particular individual receives could potentially be higher or lower is pending on their situation, yet some men and women need to consider the fact that using this particular form of consolidation could come with fees as well.
Yet, there are also some current rates on personal loans that may average anywhere from around 7% to as high as 20% or more, with average rates reportedly staying at around 11% for consumers in a good financial position, but this too is going to be subject to change when it concerns a consumer’s personal financial situation. However, both credit cards and personal loans have been used for debt consolidation purposes but it will not always be in a consumer’s best financial interest, which is why there are some financial advisers who are suggesting that consumers explore a variety of options when it comes to paying off their debt in an affordable manner.
It is true that debt consolidation can offer lower payment options, and in the case of balance transfer credit card specifically, there may be the opportunity for lower overall costs when certain introductory offers allow for a period where no interest rate charges will be applied to the balance. Yet, consumers do need to remember that fees and could push the overall amount they have to repay up slightly higher, even though interest rate costs will not be applicable in some situations.
What consumers may want to explore outside of these consolidation options though usually centers around opportunities for debt assistance that may be directly from their lender or aid from nonprofit credit counseling services that may help in a more generalized way to improve a consumer’s financial state. While consolidation or alternative debt relief programs are not born to be right in any situation, consumers who consult financial professionals or simply sit down and run calculations on how these options will impact their specific situation may be able to make a more educated guess as to what route will be helpful.
It’s understandable with unemployment still being a problem for many or situations where costs are simply getting out of control can be troublesome, this does not mean that consumers have no options, but it may require that consumers work more quickly to decipher what repayment assistance plan will be right for them. In the end, a consumer’s debt repayment strategy will be a personal decision that only they can make, but it should be remembered that there are financial officials that can help make these decisions or at least provide more information so that consumers will no what each repayment opportunity will require.