Consolidating Your Credit Card Debt
Copyright 2005 MHG Consulting
Credit cards have revolutionized the purchasing experience since
Diners Club released the first credit card in the year 1950.
The Dinners Club credit card gave consumers limited credit that,
at times, even surpassed the personal savings of some
participants. It allowed them to buy items they usually could
not afford if they were to make a straight cash purchase. It
also provided the convenience and safety of not having to carry
large amounts of cash.
On average, American households possess 4 credit cards or a
total of 13 payment cards if debit cards and store cards are
included. There are, actually, 1.3 billion payment cards of
assorted types in circulation in the United States.
But, if you think that credit cards have made the lives of
modern American consumers easier, you may be wrong...
Statistics show that the average credit card debt for each
household in the U.S. is $4,800 per month. Also, there were 1.3
million credit card holders declaring bankruptcy in the year
2003. This figure is almost guaranteed to decrease since the
change in bankruptcy law. A filer is required to pay back a
portion of their debt if they are financially able. There are
many other changes, mostly for the benefit of the credit card
industry and you can find more information at:
http://credit.about.com/cs/legal/a/040601.htm
And if you still consider yourself unaffected by credit card
debt, then consider this: upon retirement, most Americans can
only expect to receive about 37% percent of their annual
retirement income because of prior debt payment. This will leave
many individuals depending on the government, family and charity
for economic survival.
These are some scary facts. So before you find yourself in a
position of economic uncertainty, it might be wise to evaluate
your spending and current credit card debt.
If your credit card debt exceeds what seems to be a reasonable
level, you may want to consider credit card debt consolidation.
So what is credit card debt consolidation?
In a nutshell, credit card debt consolidation is taking all your
credit card payments and consolidating them into one monthly
payment. This way, you don't have to worry about managing the
payments individually. Aside from this advantage, it may also
provide you with the following additional benefits:
- Reduce interest payments - Waive late and overtime fees -
Reduced monthly payments - Debt relief in a shorter time -
Credit improvement - Save more money in the long run
There are actually two major types of credit card debt
consolidation...
You may want to consider a Credit Card Counseling firm. They
assist consumers by consolidating all their monthly payments
into one single payment and then dispersing this to the
creditors on behalf of the consumers.
The other type is through a home equity loan or other secured
loan. This is done by exchanging an unsecured debt (such as
credit card debt) for a secured debt (a debt backed by specific
assets such as real estate).
Now, credit card debt consolidation isn't a magic balm that will
drive all your credit card debt malaise away. But, it will make
paying all your debt easier and might save you money in the long
run. Definitely an alternative worth considering...