Tips for Credit Card Debt Consolidation

Remember we had warned you! And now, most probably you may have already stuck with credit card debt! Well, in today’s financially troubled world, it seems as though everybody is having difficulty in making all of their monthly payments. And for each month that happens, their outstanding balance just gets higher.

First of all, let answer this pertinent question;

Can a Credit Card Company Sue You?

YES. They can, and they will. While it might seem unfair that you owe a few thousand dollars and are being sued when these companies obviously have billions, that’s simply the law. You signed a contract when you started using the card. So if you wonder, can a credit card company sue you, you need to know that they can and they will if you don’t pay.

Credit card companies make their money by keeping people paying for years. They make their money on the interest that you pay on the debt. In fact, they make several times what they originally “loaned” you by allowing you to make purchases on credit. If you’ve stopped paying, you’ve stopped their income stream. It doesn’t matter if you were “loaned” $500 and paid back $3000 in interest over the years on that same $500. You still owe them and they can and will sue because you broke the credit card agreement.

Some people don’t realize that when you sign a credit card agreement, it’s not something to be trifled with. It’s a legal and binding contract. Break it and you can be sued, no matter what.

If you owe a credit card company a lot of money and fear being sued, you can contact them and try to arrange payments that will satisfy them. If you’re on the verge of being sued, they’ve probably already sent the debt to a collection agency.

Contact them, in writing, with a proposal about payment arrangements. If they have already made you an offer about paying less than you owe, as many will do, that’s your best bet to get out from under the debt before you’re sued.

Some agencies will offer to let you pay from 50% to %75 in one lump sum to erase the debt. Some go even lower, and let you make a few payments to do so the same thing.

Some collection agencies make such an offer about the second time you hear from them. The first time is just presenting you with the debt, telling you to pay it, and mentioning that if you don’t dispute it within 30 days, they’ll assume the debt is yours.

The next contact might not be anything but another demand for full payment. After that though, most will start making offers. Some make better offers as time goes by, and some don’t.

Keep in mind, the longer you wait, the larger your debt becomes. Interest accumulates even if you haven’t used or paid on that card in years.

Many of these companies will make better offers after a long time goes by. If you get a good offer, like paying about $1500 on a debt that’s almost $3000, you should find a way to pay that. Because not only can a credit card company sue you, but when they do you’ll have to pay whole amount plus more interest and court fees.

5 Tips On Credit Card Consolidation

Here are some great tips on credit card consolidation to help you manage your debts more effectively.

1) Draw up a financial budget. Yes I know it is boring but you will never be able to get out of debt until you know exactly how much you earn and what you spend your money on. In order to get a true picture you need to keep a spending diary for a month. Write down every cent that you spend. This is the only way you will be able to find those holes in your spending that need to be plugged. It will also highlight areas that you could cut back on in order to release money to pay towards reducing your debts.

2) You need to make a list of all of your creditors stating their name, your account number, the total amount you owe, the minimum monthly payment and the interest rate you currently pay.

3) Now you have your financial budget and the list of your debts, you can see how much extra a month you can afford to start paying to eliminate your debt. While you are completing this exercise you should keep your minimum monthly payments going.

4) If your accounts are up to date and you have an excellent record with these credit card companies, ring them up and ask them if they can do you a special deal on the interest rate you are paying. You may be pleasantly surprised when they say yes. The lower the interest rate, the more of your money will go to reducing your debts. They may ask you to move your other debts to their card in return for a great deal. This may be the best way to achieve credit card consolidation but don’t jump into anything just yet. Ask them to confirm the deal in writing making sure that they confirm the charges and the percentage minimum monthly payment you will be expected to make. You can then review these offers and pick the best one for you. Don’t always go for the lowest interest rate. 0% over 6 months is great but 2% over 24 months is better if your financial budget has indicated this is how long it will take to clear your debts.

5) If your current creditors won’t help, don’t be tempted to take out a loan secured on your property to repay these debts. This is one of the last solutions you want to do as effectively you are giving your creditors more protection and yourself less. The best bet before you enter into any form of consolidation is to speak to a qualified advisor first. Don’t pay for this advice as plenty of charities will provide it for free. Remember you are on a mission to cut your spending in order to get out of debt.

Hopefully, these 5 tips on credit card consolidation will help you to repay your debts faster. Now, let’s look into possible option you may have to manage your credit card debts.

Credit Card Bill Consolidation Loans

Credit card bill consolidation is the kind of thing well worth considering. The reason debt gets out of control so quickly is the interest rates are so high, not to mention the late fees (which are included when calculating interest). The typical consolidation loan offers much lower interest rates and that alone can add up to a lot of savings.

While the amount you pay in monthly will be reduced, and that’s a good thing, the overall amount you pay in over the life of the loan can be reduced substantially as well. Do not just assume that’s the case, though, you still need to double check the numbers yourself as each situation is unique.

You will have to add up what the cost of paying off your debt with minimum payments will be. If you go online, you can find different calculators that make this step much easier (compound interest isn’t the easiest thing to calculate). Be ready to be surprised! Chances are good that the total amount you will end up paying is much higher than you estimated.

Once you arrive at that figure, the next step is to figure out the total cost of the credit card bill consolidation loan. To do this, simply multiply the amount of your monthly payment by how many months the agreement is for. Now all you have to do is compare you minimum payment total to the consolidation total. Bingo! You can now see how much of a difference it will make.

That’s only the beginning. Now that you have some real numbers to work with, it’s time to shop around. While your initial calculations may look promising, with just a bit more effort you can save even more. Debt consolidation is like every other loan. Each aspect is negotiable. If you can’t extend the number of payments, try reducing the interest. Even half of a percentage point could add up to thousands of dollars.

You can easily get started by going to the internet. You will be able to find many banks and lenders, and then compare their rates to get an idea of which ones to contact first. Be careful though! The smallest interest rate doesn’t always equate to the best deal.

Finally, let the top few companies you have selected compete amongst each other. When you get your first offer, don’t accept it right away. Instead, go to a different lender and see if the can do better. Then wait to accept their offer and go to another lender (or back to the first one) and see if they can beat that offer. Repeat the process until you feel like you are getting the best deal. Remember, it’s your money, and your quality of life. Do whatever it takes to get the best credit card bill consolidation offer, you’ll be glad you did.

Credit Card Debt Services

There are many credit card debt services available, most of which are designed to help you cope with your credit card debts and get them back under your control. Depending on your level of debt, you should check what kind of credit card debt services you require before you sign on for any program.

You should also be aware of the services you’ll be getting and how much you can expect to be charged for those services. Be sure that you’re applying for the right credit card debt services for your individual situation.

Credit Counseling Services

Financial credit counseling is perhaps the simplest form of credit card debt services. Certified counselors are trained to take a look at your financial situation and then help you to find ways to adjust your current budget. They’ll also work with you as you learn how to take control of your financial obligations in a responsible manner.

In many cases, credit counseling could be the perfect solution for many people, because you’re not just learning how to reduce your debt properly and effectively, but you’re also learning valuable financial literacy that can help you avoid getting into the same financial mess again in the future.

Debt Consolidation Services

Many debt consolidation companies offer credit card debt services in the form of consolidation loans. Their aim is to refinance your current credit card balances and roll them into a consolidation loan that is often charged at lower interest rates. Your old repayments stop and you only have one easy repayment to think about each month that is often much lower than your old payments.

While it appears that all your credit cards have been paid out and your payments have been reduced, it’s important to look at your overall level of debt. Many people who apply for debt consolidation loans through credit card debt services find that they owe more than they did after the loan is established.

This is usually because some of your old creditors may have added penalty interest or overdue fees to your balances, but it may also be because the company you’re working with may have also added their fees to your debt balance. While you might feel as though you’re paying less each month, you may have actually increased the amount you owe. Always check how the company you’re working with will be paid.

Debt Negotiation Services

Credit card debt services exist for those clients who haven’t made any payments on their credit cards for several months. If this sounds like you, then you might consider applying for a debt negotiation program.

Companies offering debt negotiation, or debt settlement, work with you to negotiate with your creditors on your behalf in an attempt to get the lender to settle for a smaller amount of money as payment in full for your outstanding credit card debt balances. This works best on unsecured debts like credit cards and you should be able to show the company that you haven’t made repayments for at least a couple of months.

In many cases, credit card debt services using negotiation as a tool to reduce your debt can often get your creditors to agree to accept 40-50% of the original debt amount. This can be a significant debt reduction for many people.

AKPK Debt Management Program for Malaysian

The Credit Counselling and Debt Management Agency, or commonly known as Agensi Kaunseling dan Pengurusan Kredit (AKPK). AKPK is an agency set up by Bank Negara Malaysia in April 2006 to help individuals take control of their financial situation and gain peace of mind that comes from the wise use of credit.

If you are a Malaysian reader, you may opt to join the AKPK’s Debt Management Program (DMP) in order to regain control of your life and your debts. Through the program, AKPK’s financial advisors will work with you to develop a personalized debt repayment plan in consultation with your financial service providers. The good news is; DMP services are offered FREE for individuals.