| The definition of credit card consolidation is simple. It | | | | number of payments, what the payment will be, and |
| is the act of obtaining a loan to pay off several | | | | when the last payment will be paid. Consolidation |
| balances at once. Once you do this, all you are left to | | | | loans work the same way. |
| do is pay off the loan. | | | | #3 - Monthly payments that count. With credit cards, |
| There are several benefits to credit card | | | | you are given a monthly payment that will keep your |
| consolidation: | | | | credit score intact, but you are really supposed to |
| #1 - Lower interest rates. The average consumer | | | | pay more than that if you want to pay your bill off. |
| credit card interest rate is 18% or more. Consolidation | | | | However, many times we rely on just making the |
| loan rates can be half that. The lower the interest | | | | minimum payment so we can keep some cash in our |
| rate, the lower the monthly payment and the less | | | | pockets. This works in order to help us live from |
| you will have to pay back over the life of the loan. | | | | month to month, but over the long run, these |
| Did you know that your credit card interest rate | | | | payments don't really count toward your principal |
| could skyrocket to over 22% if you make one late | | | | balance. What you are doing is paying interest month |
| payment? Consolidation loans do not do this. They | | | | after month, but none of your payment is going |
| come with a fixed interest rate and fixed monthly | | | | toward paying the bill off. Since credit card |
| payments that will not dish out any surprises. | | | | consolidation loans are installment loans, each monthly |
| #2 - Specific loan terms. Credit card balances remain | | | | payment counts toward the end date. If you are |
| open until you have paid them off. If you are making | | | | scheduled to make 36 monthly payments, your first |
| minimum payments on high balances, chances are | | | | payment counts toward the elimination of your debt |
| you will be paying on those balances for a long time. | | | | just the same as your last. |
| Many times, people carry the same high balances for | | | | Yes, the definition of credit card consolidation is |
| ten years or more as they struggle to make | | | | taking out a loan to pay off your balances, which |
| minimum payments. Credit card consolidation loans, on | | | | may seem scary when you are trying to eliminate |
| the other hand, are "installment loans" that come with | | | | debts, but when you think about it the rewards are |
| a fixed interest rate, a fixed payment, and fixed loan | | | | worth it. As long as you stick to your debt |
| terms. What this means is that you know the end | | | | consolidation installment plan and don't open up any |
| date as soon as you are approved for the loan. Car | | | | new accounts while you are in your repayment |
| loans are great examples of installment loans. When | | | | period, you can be debt free in a matter of months |
| you purchase a car, you are given a booklet with the | | | | (not decades). |