4 Benefits and 3 drawbacks of credit card debt consolidation

Credit card debt consolidation helps to reduce your credit card debts. You can get credit card debt consolidation loan from a credit card debt consolidation company without any difficulty. Let us know few benefits and drawbacks of credit card debt consolidation.

Benefits of credit card debt consolidation :

The 4 benefits of credit card debt consolidation are given below :

1. Low interest rates  

The interest rate of the consolidation loan offered by a credit card debt consolidation company is low provided you do have a moderate credit score. Normally, the interest rate of a secured consolidation loan (home equity loan) is low. You can even get a consolidation loan with lower interest rate than all your other credit cards combined.

2. Low monthly payments 

There is a considerable decrease in the monthly payment due to low interest rate. This is the biggest advantage of credit card debt consolidation.

3. One monthly payment  

Previously you had to make payments for several credit cards in a month. It was quite difficult for you to remember about all the credit card bills. But now you have to pay only once in a month which you can remember easily.

4. Relief from creditors  

You will no longer be harassed by the collection agencies and the creditors. The credit card debt consolidation company will deal with the creditors on your behalf.

Drawbacks of credit card debt consolidation

The 3 drawbacks of credit card debt consolidation are given below :

1. Higher overall cost  

Credit card debt consolidation loans are long-term loans. Eventually, you may end up paying more interest on the loan. That means that the overall payment is more. It also means that it will take a long period of time to get rid of debt.

2. May loose your home 

If you have have taken a secured loan and have pledged your home as collateral, then you might loose your your home in the event of loan default.

3. May not qualify for a loan  

If you have too much of bad credit, then you may not even qualify for a credit card debt consolidation loan. Even if you get a consolidation loan, then also you will be charged high interest rate.

Finally, you should work with a reputed credit card debt consolidation company so that you don't become a victim of scams.