Debt is a problem that plagues millions of people. USA Today released a story that said that two-thirds of Americans were behind on their debt. A wide range of solutions is available to help Americans to get out of debt. Debt Consolidation is one of the most popular solutions. Credit card debt consolidation is the process of merging one’s numerous accounts together to create one account. Many people conduct consolidation by taking out debt consolidation loans. However, consumers can conduct a debt consolidation in more ways than that. The following is some information about creating a debt consolidation situation without ever taking a debt consolidation loan.
Credit Card Debt Consolidation
It is possible for a consumer to conduct a debt consolidation using a high-limit balance transfer credit card. This option is only available to people who have excellent or good credit because they are the only people who have access to high-limit cards. A credit card debt consolidation can work wonders for such people by helping them to straighten up debt. The consumer can initiate the consolidation during the process of applying for the credit card. All that is necessary is that the applicant enter his or her account numbers and balances at the end of the balance transfer card’s application.
If the consumer gets approved for the credit card, the creditor will move all of the other accounts onto the card, and the cardholder can pay on all the debts at one time. The beauty of this type of consolidation is that the credit card is a revolving account. Furthermore, the credit card company may offer something like an interest-free introductory period. The consumer can take advantage of that by paying down debt diligently during the promotional period.
Finding the Right Credit Card
A vast assortment of credit card comparison sites is available. A consumer can find a card and use it to conduct a debt consolidation easily by using such a site. The two elements that will be most important are balance transfer options, introductory APR and credit limit. The limit on the credit card must be equal to or greater than the total amount of the person’s debt.
Debt Management Program
A debt management program is another option that a consumer can use without applying for any loan funds. The consumer uses a third-party company to help him or her to get back on track. This third-party company is known as a debt management company, and debt management is its sole purpose. People who work for such a firm are on the side of the consumer. They want very much for the consumer to get his or her life back like it was. Counselors are people who usually handle the cases and do all of the legwork in the client’s recovery process.
What Happens in a Debt Management Program
What happens first when someone contacts a debt management company is that someone from that company will request some information from the debtor so that the company can review the credit profile. The specialist will develop a special plan that will allow that person to assist the consumer with debt. If the debtor agrees to the arrangement with the debt management company, then the debtor will have to approve the debt management counselor to handle his or her affairs.
One of the first things that such a counselor will do is try to contact the creditors and get the balances down. The next step is coming up with the figure for the consistent once-per-month payments that the consumer will need to make once all the balances are reduced as much as possible. The monthly amount will include all payments to all creditors plus the fee to the debt management company. The consumer will begin giving monthly payments directly to the DMP counselor, and that person will make sure that it is evenly distributed among the appropriate creditors. A DMP program usually lasts five to six years.
The DMP and credit card consolidations are two popular alternatives to the traditional debt consolidation loan. Other options are available. Consumers can try rare but effective alternative options if these do not work for them.