Payday Loans Online Direct Lenders Only Why You Shouldn't Use A Line Of Credit To Pay Off Credit Card Debt
Living a debt free life is a dream for most Americans who have been struggling with credit card debt for years. Financial freedom seem like a farfetched dream and unfortunately, a lot of us are looking for the easy way out.
One of the debt relief options for credit card debt is taking out a debt consolidation loan. It involves taking out one big direct lender payday loan to pay off all the smaller ones and concentrating on that one payment. For instance, you have 5 credit cards that owe $5,000, $7,500, $2,500, $3,000 and $4,000. A debt consolidation official payday loans online will tell you to apply for a $22,000 loan so you can pay off all 5 and then you concentrate on paying this huge loan.
While this may be a legitimate course of action, I advise you to think twice before you push through with it. Although this may be the best option for some financial scenarios, it does not really solve your debt problems. It may be easier to manage your debts, that is true, but it does nothing to lower your outstanding balance. It may also give you a lower monthly payment scheme but the difference from the original is not really great to begin with.
To help decide, here are some of the reasons why I would not opt to use a line of credit to pay off my credit card debt.
The first is the fact that this is only a temporary solution. It is true that we cannot eliminate the benefit of having only one payment and interest rate to worry about (less stress is always welcome). However, you are not really tackling the real problem here - your spending and budgeting habits. More often than not, you will develop too much complacency that could delude you into thinking your debts are not so bad. Now that 5 of your credit cards have zero balance, the temptation to use them again (and put you further into debt) will be greater than before.
Another reason why I would not use this debt relief option is it usually requires a collateral so you can get a secure direct lender payday loans. The most popular collateral that lenders ask for is your home equity. Putting this asset on the line for your debt is never a good idea. In the event you cannot pay for this debt, you will end up losing your home on top of being neck-deep in debt!
If you have no collateral to provide the lender, the loan that you will have to apply for is an unsecure loan. This type of loan is characterized by high interest rates, short payment terms and high monthly dues. All these defeats the purpose of going for another loan and thus making it an impractical way to settle your debts.
Considering a debt consolidation loan means you are not really concerned about lowering your total debt - otherwise, you would have opted for a debt management or debt settlement plan. If this is the case, then the best course of action is to just pay off your credit card debts one by one.
Start by constructing a budget plan so you can analyze your monthly income, expenses and the total debt that you owe. See where you can maximize your savings to increase the amount that you can allocate to pay off your credit cards.
Pay the minimum of the high interest rate cards while increasing the payments on the cards with the lowest balance. Once you finish off one card, you will feel better and encouraged to go on to the next card - until you finish them all off.
The key to conquering your debts is knowing your different options, creating a budget plan, staying true to your financial capabilities and disciplining your spending habits.
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