Christian Debt Consolidation - Credit Cards
Filed Under Credit Card Consolidation |
The idea behind credit card consolidation is to transfer high interest debt on to lower rate cards. The credit crunch and the decline in home values means Home Equity Lines of Credit (HELOC) which have been the means by which many have consolidated debt are harder to come by. Not that taking a HELOC was a solution to debt problems anyway but that’s another story.
If you find yourself in a situation where your minimum monthly credit card payment exceeds your available income you need a solution fast. As I repeat over and over again on this site resist the temptation to make a snap decision and rush headlong into a Christian Debt Consolidation loan. There are other options and they may be more suitable.
So if a HELOC is out (and it should be if all you are attempting to do is refinance existing debt). What are our options? Well as we’re specifically talking about credit card consolidation in this article we’re seeking to consolidate these by applying for a new credit card that will charge us a lower interest rate. There are often 0 percent or low interest rate cards available (at the time of writing this article I can see cards offering 0 percent on balance transfers for up to 12 months).
If you can get one, these cards can represent a fantastic opportunity to pay off some debts. They should not represent an opportunity to keep spending and indeed your new card should reside in a drawer at home for emergency use only. Pay the maximum you can each month and because of the 0 percent interest you are actually paying off the debt more rapidly without accumulating additional interest.
Now comes the fine print. On the surface these cards represent great deals and some do but sadly, the Credit Card industry doesn’t live by Christian principals and often glosses over some key facts of which you need to take into account before entering a Credit Card Consolidation exercise.
Firstly, shop for the lowest interest rate and not the lowest payment. The methods used to calculate minimum payments differ, often, significantly. This means if you only make the minimum payment each month it could add years to your repayment term and that is not an exaggeration.
Secondly check the “universal default rule”. This basically means that if you are more than 30 days late on any payment to anyone, the interest rate on your credit card could shoot up and your credit score may be damaged. A card without “universal default” is preferable.
Make sure you fully understand the fees involved? Does the card have an annual fee? If so, what is it? A real doosie is the Balance Transfer Fee which is popular with many card providers. They may offer 0% interest but they often charge fees for taking on your debt. A common figure at the time of writing was 3%. Thats right another 3% added to a debt you can’t really afford. Then there are late fees, over the limit fees and other costs that can be associated with using the card. Are these fees more attractive than those of your current card suppliers or more expensive?
You should also check what interest rate will be payable when the teaser rate expires. Is it better or worse than your current deal?
You may well benefit from calling your existing card company and asking them for a better deal. After all, if you’ve been a customer for many years and you can point to other offers they may be prepared to offer you something better.
So how do you know when it’s time to consolidate credit cards? Well if you think you’re having money problems, you are. If you can’t afford to make the minimum payments and all you cards are maxed out you have a problem. If you’re in this situation take action before it’s too late. You only get to live once and life brings forth enough challenges without those brought about by debt. Consider consolidation, debt management, debt counseling, cut your expenses and entertainment.
Notice once again that we’re talking about multiple options here. Finding the solution that’s right for you will involve methods of debt reduction other than simple debt consolidation. Find a Christian Debt Consolidation Counselor that cares and can help. Don’t just accept the first offer of help or respond to an advertisement that pinches a nerve. Make inquiries to several firms until you find one that isn’t out to rip you off and has your interests at heart.
Finding the right Christian Debt Consolidation Service will strengthen you faith and put money back in your wallet. It might not be easy but with trust in God and a steely resolve you will come out the other side stronger.
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