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Credit card consolidation: How can it help to reduce or repay debt?

The total credit card debt in March 2020 is $1,084,504,800. (source: debt clock). The clock is ticking and the average credit card debt per citizen is increasing with each passing minute. As of now, the figure is $6767, up by $573 from 2019.

The economic situation of the country is grave and people are in financial crisis. The below given figures are enough to prove that.

Average credit card debt by state
Top 6
  • Alaska: $8,026
  • New Jersey: $7,084
  • Connecticut: $7,082
  • District of Columbia: $7,077
  • Virginia: $6,969
  • Maryland: $6,946
Bottom 6
  • Iowa: $4,774
  • Wisconsin: $4,961
  • Mississippi: $5,134
  • Kentucky: $5,140
  • West Virginia: $5,144
  • Idaho: $5,213

Source: Blog.credit.com

Credit card debt has become a major problem in the country especially after the Covid-19 outbreak. With the shutdown of many companies, the country is in a severe economic crisis. Many people have already lost jobs and others are working with a paycut. An increased number of people are using credit cards for buying the basic necessities of life.

How much can you save?
Monthly payment you can afford
$
.00

Consumers are paying around $1300 on interest alone every year. With the global economic crisis, this figure is expected to go up in the next few months. Unless consumers earn a big amount of money every month, it would be tough for them to repay bills on their own.

It would be wrong to bank upon the fact that people would earn a big amount given the current economic situation. So, it would be wise to find out the other ways to lower credit card debt as discussed in the below given sections.

Tips on paying off credit card debt

Eliminating credit card debts is a difficult but not an impossible task. Here are a few tips you can use to shrug off your financial obligations

  • 1Combine debt into one payment to get out of multiple billing cycles. You can do it by using a credit card consolidation plan where your multiple bills are clubbed into a single repayment plan.
  • 2Make monthly payments on time after enrolling in the plan.
  • 3Make additional payments whenever you can to pay back your creditors quickly.

What is credit card consolidation?

Credit card debt consolidation is an effective way to solve financial problems. This credit card debt relief option helps you combine different credit card accounts with various due dates to one payment. When you’re researching on credit card consolidation programs, make sure you choose one that helps to improve your financial situation. Opt for a program that helps you lower your monthly payment.

Credit card consolidation pros

  • Can pay off credit cards quickly
  • Enjoy a super low-interest rate
  • Make affordable monthly payments
  • Take care of only one bill each month
  • No late fees and over limit charges
  • Fewer collection calls

Credit card consolidation cons

  • May get into debt again as you relax more
  • Some companies charge high fees
  • You may lose assets (secured consolidation loan)

When is it good to consolidate your credit cards?

When is it wise to consolidate credit card debt and when is it wrong to walk on this path? Let’s find out from here.

When it is wise to consolidate credit card debt
  • When you can pay one bill every month
  • When you want to save money with a reduced interest rate
  • When you want to avoid late fees, fines, and penalties
  • When you want to avoid collection calls and lawsuits
When it is not wise to consolidate credit card debt
  • When you can’t pay one bill every month
  • When you have secured debts
  • When you can’t live a frugal life
  • When you’re not ready to act as per the advice of the credit card consolidation companies

Best way to get out of credit card debt

1

Credit card consolidation programs

Scenario 1:
You want to switch from multiple payments to one

Best option to consolidate credit card debt:
Credit card consolidation programs

How it works:
Here you make only 1 monthly payment to credit card consolidation companies.

Effect on credit:
It has a positive impact on your credit score.

Tip: Check out the credit consolidation reviews and find out if the company is trustworthy.

Consolidation program
2

Balance Transfer

Scenario 2:
You can manage money very well, and your credit score is good.

How to consolidate your credit cards:
Balance transfer

How it works:
Here you consolidate credit cards into one card with 0% APR available for a very short period.

Effect on credit:
Your credit score may drop initially.

Tip: Pay off the entire balance within 6-12 months to avoid paying a high-interest rate.

Balance transfer method
3

Credit card consolidation loan

Scenario 3:
You want to get rid of debt now and have assets

How can I consolidate credit cards?:
Credit card consolidation loan

How it works:
Here you consolidate credit card bills with a personal loan and pay it off after a certain period.

Effect on credit:
It makes a positive impact on your credit score.

Tip: Check out the loan term and rate to avoid paying more than what you expected.

Consolidation loan

Credit card consolidation companies - Tips to choose the best one

What is the best company to consolidate credit card debt? How can you pick the best company to combine all debt to one payment? The following tips should help you out.

  1. Select a company that has an affordable fee structure.
  2. Select a company that has good credit consolidation reviews.
  3. Choose a company that has a good industry experience.
  4. Choose a company that can give you legal advice if you get sued.
  5. Choose a company that can safeguard you against collection abuse

It is better to work with a company that follows a transparent work methodology.

OVLG has a budget-friendly fee structure and more than 10 years experience in the industry. It has more than 400 live reviews and an attorney hub to give you legal advice if any debt collector violates the FDCPA laws. Moreover, OVLG offers you a No Result refund Policy where you can get a refund for unsatisfactory results. You won’t get this benefit anywhere else.

How does OVLG help to reduce credit card debt?

Fortunately, OVLG is there to help you reduce credit card debt. Here’s how.

  • 1Consolidate credit cards into one payment through a credit consolidation program
  • 2Create an affordable payment plan for you as per your budget
  • 3Help you knock-off highest interest cards quickly and save money
  • 4Request creditors to forgive the late fees, fines, and over the limit fees
Find out what happens after you contact us

Mon Sep, 2018 Review: BM1 saved $40434.96



Mon Sep, 2018 Review: BM1 saved $40434.96
Client satisfaction level:
      
Read case study »

Video Transcript of Client BM1

Hello, this is BM1. I wanted to give a thanks to Oscar Sanchez and oakview law group for all the work they've done on my debt. I started with about 100k and now I'm but down to about $25,000. I think I've been with them almost three years and it's been great to just been knocking about one after another. I appreciate you and I'm certainly happy to make this video and recommendation. Again this is BM1 giving a big thanks to Oscar Sanchez and oakview law group.


* Client names have been changed to protect privacy

Does consolidating credit card debt help your credit score?

One of the reasons why debt consolidation for credit cards is good is because it doesn’t hurt your FICO score. In this plan, you’re paying the full amount but at a low-interest. Creditors are getting their full amount. So, they happily inform credit bureaus that full payments have been done. Hence your FICO score doesn’t fall.

However, if you take out a personal loan to consolidate credit card debt, then your FICO score may drop initially. When you apply for a personal loan, it triggers hard inquiry in your credit report. This hurts your FICO score. Moreover, once you take out the loan, you’re supposed to make monthly payments as per the terms and conditions. If you can’t, then late payments are reported on your credit report, and that pulls down your FICO score.

Simplest way to use debt consolidation without affecting credit is to make payments on-time.

Ways to reduce credit card debt without consolidation

1 Credit card debt settlement:
The debt negotiators ask you to save a particular amount in an escrow account (usually known as a trust account) every month to accumulate enough money for settling credit card debt. Once you have saved a specific amount, they will start the credit card settlement process immediately. They will ask your creditors to lower your payoff amount in exchange for a credit card lump sum settlement. They will call creditors and negotiate till they agree to lower your outstanding balance and waive off late fees. Once they give their nod, debt negotiators will ask you pay off the amount agreed upon and complete the credit card settlement process.

2 Credit card debt management:
This credit card debt relief option is usually offered by credit counseling agencies to those individuals who are unable to manage credit cards with simple money management techniques. This option is different from both credit card settlement and consolidation. Here you get a smart budget plan from the counselors who negotiate with your creditors for a lower interest rate on your credit cards and a smart repayment plan. Once they convince creditors for reducing interest rates, you can start paying off credit cards as per the new interest rates.

3 Bankruptcy:
This is the best way to pay off credit card debt when your creditors are not ready to give you any kind of credit card help. You can file Chapter 7 or Chapter 13 bankruptcy depending on your financial situation to pay back your creditors. The US trustee negotiates with your creditors, sells your non-exempt assets within 3-4 months, and disburses payments amongst them in Chapter 7. However, in Chapter 13 bankruptcy, the scenario is completely different. Here the bankruptcy trustee gives you the option of paying off credit cards in 3-5 years through a court-approved payment plan.

Credit card debt relief for seniors - Help is on the way

One of the simple ways to address this problem is to call 800 30 OVLG and speak to a certified Financial Coach. He can offer a solution based on the complexity of the problem. He can suggest to seniors how to repay or reduce credit card debt. He can even directly negotiate with creditors on behalf of the seniors and straighten their finances. He will try his best to lower their interest rate and monthly payments. Everything will be done online. So there is no need for senior citizens to go anywhere, which becomes a major issue for elderly people.

Senior citizens can help on credit card debt in another way. They can get relief from collection calls since the Financial Coach will be handling everything. Collectors will be speaking to the Financial Coach regarding everything.

If required, senior citizens can also use OVLG’s budgeting and bill payment program for managing credit card debt.

How to avoid credit card debt

Considering the average credit card debt interest in the country, it is tough to have complete financial independence. However, this is not completely impossible. Here are a few tips that can help you avoid incurring debts on your credit cards in any economic scenario:

  1. Pay your bills in full every month.
  2. Stay within your credit limit.
  3. Don’t share confidential details to avoid scams and debt.

FAQ

What calculator should I use before I consolidate my credit card debt?

You can use a debt payoff calculator or a debt consolidation calculator before you merge your bills into a single monthly repayment plan. These calculators can help you to understand how much you can save or when you can expect to get relief from your financial obligations.

Can I still use my credit card after debt consolidation?

Usually, when you participate in a credit card consolidation plan, creditors freeze your accounts so that you can’t make further transactions and incur fresh debt. They are already lowering your interest rate. So, you should be grateful to them for that.

Your goal is not to increase your debt. Your goal is to reduce your dependency on credit cards with good money management tactics. So, instead of thinking about new credit cards, learn how to live within your means with a budget.

Can you lose your house due to credit card debt?

You won’t lose your house for not making payments to your creditors. The reason is simple. Credit cards are unsecured debts. Creditors can only impose lien on your house after obtaining judgment against you from the court.

How to pay off credit card debt for less than you owe

You can opt for the credit card settlement program to pay less than what you owe. In this program, you have to pay less than the outstanding balance as your total payoff amount is slashed.

How can I get a loan to consolidate my credit cards?

You can get a loan from various sources. You can get a personal loan from your friends or a credit union. You can get a debt consolidation loan from peer to peer lenders, banks and financial institutions. However, the best way to get a debt consolidation loan is to knock at the doors of the peer to peer lenders as they offer competitive rates. You can also borrow a home equity loan to repay your bills as its interest rate is the lowest. But, a home equity loan is a secured debt. You can lose your house in the event of loan default.

How Can You Consolidate Credit Card Debts - Video transcript

Hi!
Are you struggling with credit card debt and wondering how to get out of it? Don’t panic.
You can easily consolidate credit cards in 3 ways. Let’s talk about them one-by-one.
The first way is to enroll in a credit card consolidation program wherein you can switch from multiple payments to one. Here you make only one small payment to a company every month, and they disburse the money to your creditors.
The second way is to transfer your outstanding balance to one credit card with 0% or low interest-rate. Some banks offer credit cards at a low interest-rate for a very short period, 6 to 18 months. You can transfer the balance to one of these cards. But make sure you pay off the balance within 18 months to avoid getting slapped with a very high-interest rate.
The third way is to take out a credit card consolidation loan and pay off the entire balance. Here you can take out a secured or an unsecured personal loan at a low interest-rate to pay off your existing credit cards.
Now, wondering which option is best for you? Call OVLG at (800)-530-6854 for a free consultation from financial coaches.


Last Updated on: Tue, 18 Aug 2020