Credit Card Debt Consolidation
The problem of excessive credit card debt has grown enormously in recent years. In fact, the amount of credit card debt taken on by Americans went over $700 billion for the first time. Usually during recessions the amount of debt decreases as people spend less and generally become more conservative, but in many cases the amount of debt has increased recently because people who have lost jobs have been living off their credit cards until they get a new job.
Despite 10 cuts of the fed funds rate by the Federal Reserve this year, the interest rates on credit cards has only fallen slightly, while rates on savings have plummeted. The average interest rate on credit cards is still about 15%, while money market fund yields have fallen to about 3%. Many credit card companies have lower limits in their contracts, so their rate can not fall to below 10%, for example, no matter how far the Fed lowers rates.
So how can you either lower your interest rates on credit cards or, even better, get out of debt altogether?
First to get the lowest rates on cards you can shop for cards with permanently lower rates. Most of these cards are issued by banks in Arkansas because that state imposes usury ceilings preventing banks from charging more than 10%. If you are mired down in credit card bills and feel you are slipping further behind each month, a debt consolidation program may be the answer.
A Debt Consolidation plan will allow you to manage your finances without a consolidation loan and without declaring bankruptcy. During these times of financial uncertainty a Debt Consolidation plan can help you stay ahead of potential financial disaster in the event of your lowered income or temporary lay-off from your current job.
You will not only stay ahead of all of your bills, but actually save thousands of dollars by "locking in" your reduced interest rates and lowered pay-off amounts on your current debts.
The consolidation of credit card debts and unsecured loans makes rapid debt reduction possible, because a debt financed at 4% to 8% or even lower is much easier to pay off than a debt financed at 15% to 22% or higher.
Debt Consolidation loans are a popular alternative. Consolidation loans allow consumers to combine all of their existing debts or credit card debts into a single loan and one monthly payment.
The primary advantage of a debt consolidation loan is that it simplifies your life by allowing you to make a single payment to one creditor rather than to many creditors. Debt simplification is appealing to many people whose personal finances have become complicated and unmanageable.
If your debts are mostly unsecured, debt consolidation makes a lot of sense. A debt consolidation plan will create a budget for your realistic monthly living expenses.