Having a credit card is a responsibility. The more credits cards you have, the more you should be mindful of your debts. To have balances on several different credit cards can be quite challenging. One should be mindful of his/her balances to avoid late payment of bills that are due as late payment, or even non-payment of bills, can negatively impact one’s credit score.
If you have multiple debts on different credit card providers and you want to avoid missing payments of your bills, you can resort to debt consolidation. It is the process of combining multiple debts from credit cards, high-interest loans, and other bills into a single payment. When a person is burdened with different kinds of debt, he/she can apply for a loan to consolidate those debts into a single liability and pay them off. If your debts are not excessive, you can use this financial technique to prevent possible bankruptcy. Another advantage of debt consolidation is you can have a good grasp on managing your accounts effectively and from there, you can create a plan to keep your debts in check.
In this article, the experts from Fix Bad Credit impart some of the ways to consolidate your debts effectively by yourself.
Utilize A Life Insurance Loan
If you are pushed to the wall between choosing filing for bankruptcy or utilizing a life insurance loan, the best choice for you is to opt for the latter and borrow money from your life insurance policy. Although borrowing money from your life insurance policy may not be the most ideal way to consolidate debt, when you are left with no better alternative, it is wise to opt for it.
When you sign up for your insurance policy, you were probably appraised by your life insurance agency that you can borrow up to the cash value of your loan and utilize these proceeds to consolidate your debts. If you utilize a life insurance loan, insurance companies will not require you to make payments as long as the loan that they will extend to you is less than the cash value of the policy. But to be prudent, despite not being required to pay, you should still make payments to boost your standing with your insurance company. Be that as it may, if the shit hits the fan and you failed to settle the loan, the proceeds you borrowed will be set off by your death benefit, leaving your insurance beneficiary getting nothing at all in the end.
One can also consolidate his/her debts by transferring balances into a single credit card. If one of your credit cards has a large credit limit, then consolidating your debts through balance transfers is surely a way to go since this single credit card will definitely be able to cover multiple balances from your other credit card accounts. This is the optimal way of debt consolidation if your credit card allows you to transfer two to three of your credit card balances with a lower rate, thus, you can save money on interest and possibly help you pay your debt faster. This will help you unsaddle some of your debt pain. Instead of paying several balances on different due dates, which may cause confusion or worse, result in late payment or non-payment of your due bills, you can repay your debt with one monthly payment.
Before considering doing this, make sure to calculate the possible effect of balance transfers on your finances. If you will end up not saving money from doing this, then it’s not worth the effort and you may end up paying more than paying your individual and separate balances.
Home Equity Loans and Lines of Credit
Similar to utilizing your life insurance loan, you can also consolidate your debts by home equity loans and lines of credit. A home equity loan means borrowing against the equity in your home — that is, the difference between your mortgage balance and your home’s market value. You can borrow money against your home equity as it is a closed-ended account that can be repaid over a period of time. Meanwhile, a home equity line of credit is an open-ended account which operates similar to a credit card whereby you are allowed to borrow against and repay. One advantage of a credit line is that you only pay interest on the portion of the line of credit you use, rather than the entirety of the amount borrowed in a home equity loan. But both home equity loans and credit lines include higher borrowing limits compared to other kinds of loans.
These are some of the ways on how you can consolidate your debts for your convenience and to avoid filing for bankruptcy. You should take advantage of these options and choose the kind of consolidation you want depending on your financial situation. You can also consult someone from Fix Bad Credit to help you manage and fix your bad credit.