Do You Know When To Consolidate Credit Cards?
Posted on
May 26, 2009
at
12:20 pm
I don't, so if you do any information would be great. I noticed a lot of great info as to what debt consolidation is on this website, but I still haven't found much info as to when a person knows they need to do this (this is my first day on the site!).
Posted on
May 26, 2009
at
2:13 pm
There are many reasons, but here are a few: 1) The person has multiple credit card accounts and has trouble getting out all of their monthly payments on time. 2) The person has high interest rates on their credit cards and wants to consolidate under a debt management plan in an attempt to get those rates lowered. 3) The person is behind on their payments and wants to consolidate under a debt settlement program to try and negotiate their balances down. 4) The person qualifies for a low interest debt consolidation loan that allows them to pay back less interest over time as opposed to paying of each credit card at a higher rate. These are just a few reasons, can anyone add to this list?
Posted on
May 26, 2009
at
4:43 pm
5) you lose sleep over your debt problems 6) you lie to your spouse about your debt problems 7) you can't afford your minimum payments 8) you pay interest only every month 9) you are getting calls from debt collectors 10) you are getting calls from attorneys 11) you don't want to file bankruptcy
Posted on
May 28, 2009
at
7:45 am
Not a bad list at all guys, I am sure we could all think of many more. Cro- you can also fill out a form on this website and get a free consultation to see if you are somebody who should consoldate your debt. It can't hurt!
Posted on
June 1, 2009
at
12:31 pm
It also depends on how you want to consolidate your debt. For example, someone trying to take out a consolidation loan may be facing far different circumstances than someone trying to consolidate through a debt management program (credit counseling). Keep in mind that debt consolidation is a term that at present times is used loosely to define a loan, credit counseling and even debt settlement. All three "forms" of consolidation are extremely different and while one form may benefit one person it may be highly ineffective for another.
Posted on
June 2, 2009
at
1:33 am
Good points raised by everyone here. I also think that a good time to consolidate credit card debt is when your debt-to-income ratio has increased to a significant level. To be a little more technical, a DTI ratio is the percentage of a person's debt taken against his monthly gross income. It is the sum of all the bills that he or she pays each month, divided by their currently monthly income. If your ratio exceeds 36%, which is the standard rate, you may want to opt for a debt consolidation option.
Posted on
June 2, 2009
at
2:57 am
Just to add to what Karess said, here's how to compute your debt to income ratio. For example, your monthly income is $5000. Multiply that amount to 0.36, which is the ideal rate for the DTI, and you get an amount of $1800. In order for you to stay current on everything and live according to your means, you shouldnt exceed $1800. Generally lenders are specific abt these matters, but some allow as much as a 40 per cent rate.
Posted on
June 15, 2009
at
2:43 pm
Ok so if I had 4 credit cards, I am current on all of the payments and owe roughly $30 K what would the best debt consolidation option be at this time? Would you even recommend consolidating?
Posted on
June 16, 2009
at
3:02 am
Cro foot, you can try to settle your debts. You'd be able to pay for lesser than the actual amount that you owe, which is around 30K$ as you said. Although I am not entirely sure if you can actually consolidate given that your accounts are current
Posted on
June 16, 2009
at
4:24 am
Right, because some debt consolidation companies require that the accounts should be delinquent. In fact some of them actually ask you if you've been behind for 30 days on payments. Cro said he's current on all his payments, too. You can try negotiation with the creditors yourself in that case. If they don't agree to your terms and still insist that payments be made in full or whatever, you can try to consolidate.
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