Digital News Report – People may have several outstanding loans and may want to consolidate credit card debt with one single loan. The reasons for refinancing credit card debt with a consolidation loan is usually to ease the burden of paying the monthly bills. If you have several minimum monthly credit card bills to pay they could add up to more than you are able to pay. You could refinance the credit card debt into one new debt consolidation to have a reduced monthly payment.
Another reason to get a consolidation loan to pay off your credit card debt is to lower the interest rates. Interest rates are determined by you credit score. The higher your credit score, the lower your interest rate typically is, so having a good credit score is very helpful. If you have a poor credit score you still might be able to get lower interest rate because credit card interest rates can be quite high.
You can shop around for either a unsecured debt consolidation loan or a secured consolidation loan. The unsecured loan doesn’t require any property to be used a collateral. The interest rate could be higher, but you don’t risk losing your home or car in the process if you fail to make a payment. The secured loan is one were you have property put up as collateral. Failure to make the debt consolidation loan payment on a secured loan could cause you to lose your home or car.
It is always advisable to seek out a government authorized credit counseling service to help you learn how to pay off your credit card debts. They can help you set up a monthly budget so that you can become financially sound again.
By: Victoria Brown