Credit Card Consolidation - Choosing a Safe Variant

The average US credit card debt is mounting and it is becoming ever much harder to manage it. The number of consumers accustomed to using their cards purely for the sake of rewards and paying their balances off each month is still relatively small. The major part of US cardholders is still dependent on their credit cards in their everyday life. It's easy to guess that regularly pulling out your plastic to pay for a morning cup of coffee, let alone other things you need every day, is very likely to pile you under a heap of unpaid bills sooner or later.

However, while debt has become a common thing for the US credit cad industry, it should by no means be something desirable for an American household.

Analysis of the market shows that the number of people looking for credit card debt consolidation leaves behind those running after beneficial rewards credit cards. It is no wonder that with the increased risk of consumers' defaults, low interest credit cards and rewards cards are today much harder to qualify for.

If you are among those, whose credit is being damaged by unmanageable debt, making you forget dreaming about all the good credit cards that you would probably be approved for, then start thinking of radical debt repayment plan.

There are two most effective methods of killing debt fast and at a relatively low cost. These are debt consolidation personal loans and balance transfer credit cards. While these methods can really bring positive results to your credit card debt repayment campaign, you should watch out for serious pitfalls that may ruin the rest of your credit rating.

Let's start with the debt consolidation loan which is a personal loan combining all your existing debts, including medical bills, into a single line of credit with a lower interest rate. Today there are still many consumers who opt to take out a home equity line of credit as a secured type of a debt consolidation loan.

Traditionally, as home is considered to be a customer's biggest and most valuable asset, the home equity has usually been used for major items such as education or medical bills. But as the average credit card debt is reaching unprecedented scale, for many it seems to be the only way out.

Being a type of revolving credit where your home serves as collateral, it poses great risks if not managed correctly. If you fail to repay, it could mean the loss of your home.

So, home equity line of credit, though being effective and rather easy to qualify for, is a very risky venture. What's more, the devaluation in the mortgage market and the credit card crisis make it times more difficult to qualify for this type of debt consolidation loan. So, if it still is your only variant, do all the inquiries necessary to stay on the safe side.

If you do not want to take on such a risk, it's high time to do a balance transfer. The lower interest rate on your new credit card may dramatically reduce your monthly payments and leave some spare cash to pay for other loans or credit cards. With the help of a 0% APR balance transfer cards you can repay your debt without any interest at all.

The only risk that you will have with a balance transfer is making a new debt if you start making purchases on it and skipping payments. A balance transfer cards is most effective for the pure purpose of reducing your balances but not using it for every day needs.

Copyright © 2005-2008 Credit-Land.com, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.