The Differences between Debt Reduction and Credit Card Consolidation
Using credit cards to consolidate your debts is not as effective as debt reduction. Credit cards often have high rates of interest, and will often lead you into deeper debts. In fact, credit cards are one of the leading causes that debtors seek out debt consolidation solutions.
Debt reduction means that you are working to decrease your bills, not add or keep the bills in existence by using another source to pay off the debt. Therefore, instead of considering credit cards as a source for debt consolidation, you must find a way to reduce your debts.
Let's say you owe money for your mortgage, car payments, insurance, utilities, and other bills that add up to $1200 per month. Now, is there a way we can reduce this amount? Absolutely, but can we find a mortgage that will refinance our loan and help us to combine our monthly bills into one payment?
Yes. There are loans available that offer cash back, underpayment, and overpayment plans; as well as loans that will wrap your bills into one, combining the bills and adding them to your monthly installment.
Do not misinterpret this: your utilities are your responsibility, but for the most part, your car payment, mortgage, and any credit cards or other loans will be rolled into one monthly payment. Therefore, if you're paying out of the $1200 up to $800 per month toward car payments and mortgage, you may find a lender who will reduce this amount to $600 more or less per month.
Furthermore, if you land a loan that offers cash back, you can use this money to payoff your debts.
Finally, utilities can be reserved and grocery bills can be reduced. In addition, insurance coverage can also be reduced. Therefore, debt reduction is wiser than credit card debt consolidation in the long run.
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Frequently Asked Questions
Lost Nest Egg
By: tuletess | 13-09-2008
I recently moved my retirement assets from one major brokerage house to another. After the transaction was complete, I had apparently lost approximately 1/3 of my portfolio. What can I do?
How can i repair my credit?
By: shelov | 11-09-2008
i was the victim o fid theft before so much light was drawn to by a member of my family. Not knowing about it until the letter started to roll in i discovered that i have a ton of chrged off items and at least 1 judgement against me. How can i fix this problem? I do not want to persue legal action agains the thief, it will cause even more damage. what steps can i take to restore my credit? i am without an automobile, a home and i've recently been turned down for a job.
Desparately seeking a solution,
S. G. Williams
NY
Debt Reduction Services
By: egute | 09-09-2008
I'm looking for information about a debt reduction service company called Citigroup Financial Services. Trying to find out if this place is legite. I received a cold call.
Property when not married
By: kelsey | 07-09-2008
my fiancee' and I have been together for 10 yrs, though MD does not recognize Common law marriage. House is in his name, though since it's purchse, we split all expenses 50/50. His will indicates I would get the home if he died first. I fear his ex wife would attempt to take it for the children. Anything we can do to to assure this doesn't happen, short of getting married?
Done supporting my unemployed husband.
By: laura | 07-09-2008
I am involved in a Worker's Comp case. Will my soon to be ex-husband entitled to any of the money I recieve? What about long term disability monthly payments?
Extroverted! Interests in television commercials !
By: Betty | 06-09-2008
I'm extremely interested in television commercial ads. I would appreciate some good "starter's" advice on how to approach this persuance. Could you help me please? My thanks, Bette
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