Your Guide To Credit Card Consolidation

What is Credit Card consolation?

Credit card consolidation is the instance where you pool multiple debts into one new big
loan with better conditions. Ideally, you have to take out a new big loan to
pay off your previous loans where you are only left with the big loan to pay.
When you want to consolidate your credit debts, you will have to go through an
evaluation process to establish the best solution that will save you money. You
can do this by contacting several entities and evaluate their services and

Reasons for Credit Card Consolidation

When you need a lower interest rate that means you will opt to consolidate your debt
accounts. These efforts will reduce your monthly installment payments, and you
will enjoy a deduced total amount paid to the creditor. As Johndrow noted,
"If the interest rate is lower, you can often pay more into the principal
value of the loan, paying off your debt faster."

Credit Score improvement.

When you consolidate a loan, it adds credibility to your credit score; in that, it reduces the percentage in use giving a positive result. 

Convenience Purposes.

The act of pooling all your loans into one big loan makes it easier for you to monitor and track it better.

Steps of Consolidating Credit card debts

1. Evaluate all credit cards debts.

You will need to look into all your credit cards and analyze the amount you owe all
your creditors through logging in and checking your balances. If you happen to
have any credit card that you can use to apply for money, then go ahead and do
it. On the other hand, you can inquire a copy your annual credit report.

2. Figure out the amount to borrow.

Add up all the balances for each credit card that you want to pay off.
Consequently, this is the amount that you will need to borrow from the other
creditor to consolidate your credit card. For you to choose the best loan terms
with a lower interest rate, use a credit card consolidation calculator.

3. Look for a lender.

Firstly, know the kind of loan that you want and understand your credit score. Secondly,
check for various lenders to cater to your loan needs and look out for
unreliable lenders like credit unions or online personal loan providers who
provide cash loans online.

4. Apply for a loan.

Once you find an ideal lender, it’s time to apply. This will involve steps to get a
personal loan.

Step 1: Compare your options
In this step, you figure out what type of a loan you are looking for because they
are various types of personal loans out there and the one you ask for should
suit your needs. Examples of these loans include secured personal loans,
unsecured personal loans, and individual lines of credits, car loans and so
forth. The other factors you need to look when considering loans from different

  1. Loan Amount-Maximum and minimum loan the lender offers, is it enough?
  2. Loan terms- Compare the loan terms and conditions.
  3. Fees- Check out for the monthly or annual payments if any.
  4. Interest rates- Check whether the prices are fixed or variable.
  5. Repayment amount- You can use a loan repayment calculator to check if you will afford to repay the loan.
  6. Repayment Terms-Terms such as early Repayments, choosing of payment schedule and what fee will be incurred.

Step 2: Set the eligibility criteria

This step helps you rule out a vital loan consideration that you can't qualify for.
In this criteria, you need to meet the different terms for you to be eligible
for a loan. They include; credit score, employment, income, residency, and age.

Step 3: Complete the application

The process of loan application differs between lenders ranging from the online
form, over the phone or at a branch. While completing an application, one should
be able to give necessary information such as Government issued ID, proof of
income, other financial documents, social security number or tax identification

Step 4: Wait for approval notification

Different companies and different lenders will take time to notify you of your approval

Step 5: Receive your loan

A different number of ways will be included. They are direct deposit to your
creditors in case of loan debt consolidation or either direct deposits to your
bank accounts

Step 6: Figuring out repayments

This is where you will start figuring out how to pay the loan. Most of the lenders,
especially those that offer cash loans online allow an online form of payment
whereas some prefer bankers cheque or money transfer.

Step 7: Pay off the amount you owe in the credit cards.

In this step, after qualifying for a loan and you have received the funds, settle
your credit card debts and secure confirmation of payments.
Ensure you have plans to repay the new loans and keep up with the terms and
conditions of the credit card debt consolidation.

When I think of consolidating my credit cards, the most suitable way I can opt to is
to go for a personal loan. By doing this, I will not have secured debt. This
will limit instances where the lender can seize my collateral. The steps to get
a loan fast are now very clear, and with very many lenders all over, including
cash loans online, creditors might in the future decide to forego the personal
installment loans. It is not wise to
always keep ending in the same situation now and then. The act of responsible
spending should be highly considered.

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