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Credit cards can be a boon and a bane. On the one hand they make it so much easier to purchase goods and services. On the other, they make people feel richer than they are and often people end up spending more than they can afford. The problem comes of course when the debts grow and people are unable to pay what they owe. Then various other fees and fines come up and a person ends up having a bigger debt than he or she can pay. People keep wondering and weighing between an interest free balance transfer and debt consolidation loan. What works best is determined by the type of debt you owe and your credit scores.

A debt consolidation payment seems like a good idea as it offers a single payment solution. However it is not like an interest free credit card. With a balance transfer to an interest free credit card, you can get up to 12 months time to pay up the outstanding amount. You have to be careful not to make any new purchases and incur interest rates on those however. If you have a good credit history you can do two balance transfers and sort out your debt in no time, it requires perseverance and some sacrifices to be made by the individual.

A balance transfer can seem like a good idea, if you only have credit card debts to deal with. An American has a number of credit obligations like mortgage payments, student loans, vehicle loans, gas cards, bank cards and more. In order to sort out all the outstanding amounts, a consolidation loan makes a single monthly repayment allowing for complete clearance of all debts.

Whether you wish to do a balance transfer or consolidation of the debt you owe, you need to have a good credit score. Your credit report will determine what sort of a deal you can strike and how you can work out your finances and problems. Banks would not approve a loan to someone with a poor credit score. Neither will a balance transfer with 0 charges be allotted to someone having a bad credit report. In both cases a person must have maintained good credit records and only then can be considered eligible.

When opting for a loan in such cases it might be difficult to find creditors who will believe you and lend you the money. You could try to obtain credit by signing the loan along with a spouse who has a good credit record. It could work as the loan will be sanctioned in both your names. It is also possible to obtain secured loans on bad credit. This however should be the last resort.

There are many financiers offering very high interest rates and once you sign over the collateral you may as well kiss it goodbye. Whatever purchases you made on your credit card belongs to the category of unsecured personal debt. If you turn it into a secured personal debt then you will have to pay with the collateral if you cannot gather funds. It should be the last resort, if you have absolutely no other way to gather money.