Monday, April 24, 2006

 

Debt Consolidation Solutions for People with Good Credit Rating

Borrowing against your home equity is one of the best ways to consolidate your debts and I'll not argue against it. It is a known fact - because you'll get to enjoy lower interest rates and better payment terms.

It is not the end of the world though, if you do not own a home. There are still ways out - the second best solution would be to make use of your good credit rating (if you still enjoy now) to help consolidate your debts.

Credit Card Balance Transfer
This is simply the process of transferring your high interest credit card balances to another credit card with lower interest. This is done so to reduce your monthly interest payment and can help to pay off your debts faster.

Things to Look Out for Before You Transfer Your Card Balances Ask for fixed interest rate for your new credit card transferred balances - this ensure that you pay a fixed amount every month and help you in preparing and executing your budget plan.

Ask your credit card companies if they can waive the credit card balance transfer fees - savings on the transfer fees can be use to repay your balance. This is a fee which most banks can waive.

Ask all your existing credit card companies on their interest rates and payment terms if you transfer all your other card balances to them. (Remember to ask for lower interest and better repayment terms, since you are consolidating your card balances.) Compare all your options and choose the one which you are most comfortable with.

Debt consolidation with credit card balances transfer work best if you still enjoy good credit ratings. This is because offered interest rates and payment terms are heavily weighted on your current credit rating and score.

Nevertheless, this should not stop you for asking your credit card companies even if you have poor credit rating. It is still worthwhile to transfer your card balances if you can only save a little on your interest rate every month. Every little step helps when you are consolidating your debts.

Sunday, April 23, 2006

 

Debt dilemma - choosing a debt consolidation company

QA

I don't want to get caught up with the wrong kind of debt consolidation company. What should I look for before I choose one?

--Sandra Clair Grand Rapids, Michigan

Before you look for a debt consolidation company, first determine if that's the service you need. According to Mike Kidwell, vice president and co-founder of the Rockville, Maryland-based comprehensive financial crisis center Myvesta.org (www.my vesta.org), debt management programs are for people who are behind on their bills. He says, "It's not a program that you can join for added convenience or just to attain a lower monthly payment or reduced interest rate."

That said, Kevin Thomas, president of American Debt Consolidation Inc., a nonprofit credit counseling agency in Fort Lauderdale, Florida, suggests that you choose a nonprofit company because "creditors tend to offer nonprofits better terms than for-profit corporations." Also, ensure that the debt consolidator deals with the type of creditors you owe. Some firms, for example, won't handle secured debt, such as mortgages or auto loans. In this case, they can only negotiate with holders of, your unsecured debt: the IRS, credit card firms, hospitals, or banks.

As with any consumer transaction, you should find out how many years the company has been in business and check it out with your state's Better Business Bureau (www.bbb.org). For a full list of questions to ask your credit counseling agency, go online to (www.myvesta.org/resources/rs_ questions.htm)

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