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How Unsecured Credit Card Debt Can Be Cleared Through Consolidation

Thursday, September 25, 2014

There are plenty of things we would rather do than worry about loans and bills. It might be vacationing through Europe, or charity work in Africa, or hitting the road on a coast-to-coast tour of the USA. But whatever it is, the debt we have built up is ruining such plans. Clearing debt, especially unsecured credit card debt, is possible, and consolidation offers the best solution.

It never fails to amaze people how easily credit cards bills can get out of control, creating a debt that is nothing short of crippling. But it is comforting to know that it is possible to alleviate the situation regardless of how bad the situation has become. Even getting debt consolidation with bad credit is a realistic target.

And with unsecured credit cards providing the majority of debt in the typical American household, the most positive impact that can be made on debt management is a consolidation loan that replaces the troublesome terms with something far more manageable.

What Is Consolidation

Consult the dictionary and consolidation is explained as the bringing together of a number of elements in order to create a stronger position. It depends on the context, but the concept is there. When it comes to clearing unsecured credit card debt, it is a matter of bringing all of the individual card balances together so as to pay them off in one go.

With the average American having 4 credit cards, and combined credit limits of $30,000, the job of managing these credit cards can be a serious task. Each card has different interest rates, and different late fees, so the size of the debt can become large very quickly.

Even when opting for debt consolidation with bad credit, it is possible to get a fixed sum of $30,000 to pay off the debt created by the unsecured credit cards in one simple payment. And replacing it with a single loan repayment over a longer term makes the debt easy to pay back.

Advantages Consolidation Provides

There are several advantages to using consolidation loans to clear unsecured credit card debt, not just the fact that the debt is removed in one go. For a start, the credit rating of the debtor is immediately improved.

Another is that the job of repaying the new consolidation loan is made easier by the terms of the loan. For example, the debt may still be $30,000, but the sum can be repaid over 10 years. This means that monthly repayments of just $265 are needed to pay off the sum. So, even when opting for debt consolidation with bad credit, the financial pressure is alleviated greatly.

However, the advantages enjoyed depend on the terms secured, the total debt to be cleared and the source of the debt consolidation loan. This means that despite the benefits of paying off your unsecured credit cards, there are some issues to consider.

Your Consolidation Source

There are two main sources of a consolidation loan: firstly, a general loan provider, whether traditional or online; and secondly, from a dedicated debt consolidation company. When considering the best to use to clear your unsecured credit card debt, it is important to understand the difference.

From a regular lender, a consolidation loan is usually available at competitive terms but when trying to get debt consolidation with bad credit, there may be issues over the size of the possible loan. This creates a problem if the debt is very high.

However, a company will take on larger debt on you have, and even negotiate a final settlement sum with your creditors. In return, they will charge a fee as well as accept monthly repayments at a competitive interest rate. Either way your unsecured credit cards are paid off and your financial status improved.

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