Lower Minimum Payments of Credit Card with Debt Consolidation

After the recent economic depression, credit card has become a part and parcel of everyday life in the U.S. Conversely, credit card companies are incessantly raising the interest rates, lowering spending limits and increasing minimum payments, due to which people are often not being able to pay the monthly credit card bills. Thus, the credit card bills get piled up, and become impossible to be paid off in time. In these circumstances, the most viable option is to go for credit card debt consolidation services, which will mitigate the minimum payments of the bills helping you to clear them off.

Under debt consolidation, you are entailed to take out a single loan at a lower interest rate and consolidate the multiple credit card bills into the one monthly payment. Debt consolidation loans are offered by many financial institutions like bank, credit union and loan companies. This type of loan is mostly an unsecured loan, but you can make it secured with some kind of collateral.

Credit cards usually offer short term loans at 20% + interest that come around 24%. So if a person has a balance of $10,000 at 24% interest then in the first month he has to pay an amount of $10,200, which will gradually increase to $10,404, $10, 612 in the consecutive months.

If the same event occurs over five credit accounts then the person will have to pay ($200×5) $1,000 in the first month itself. But many people do not have the capability of paying $1,000 more to pay down the principal amount. So if you opt for debt consolidation then you can avoid paying this outstanding amount every month.

Before consolidation, the interest payment in the first month would be $1,000. But after consolidation the interest payment is $500 as the interest rate is reduced to 12% from 24%. That means a person who had to pay $1,000 previously, now has to pay only $500 in the first month. So he is now left with $500 extra, which he can indulge in paying down the principal amount in order to come out of the torment debt as early as possible.

So to conclude, debt consolidation is one of the best options to lower the credit card minimum payments, and to unburden from the insurmountable debt.

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