6 best credit cards that seniors can opt for

6 best credit cards that seniors can opt for

Posted by: consolidatecreditcard_admin on

Seniors maintain a different spending pattern based on their priorities and financial need. This spending pattern in quite different than the pattern that young people normally follow. The reason behind this difference is seniors live their on a fixed income throughout their life, practically on their retirement funds, Social Security benefits, etc.

After retirement, seniors still have the need of money each month to pay for their critical expenses. And to fulfill that need, seniors also require specialized credit cards to make transactions.

If you’re a senior individual and require a specialized credit card, you can check out the below-given a list of some of the best credit cards for seniors available in the market.

 

a) AARP credit card

This one is the best, as per the market review. Andy Misek of the website Finance Guru suggests that seniors can use the AARP credit card from Chase as it is specifically made for seniors.

He also explained the seniors may get 3% cashback on gas, 1% on groceries and eating out. You also get $100 back after you spend $500 in the first 3 months. The card has a 0% APR for the first year and 16.49% after that. It also charge a 3% foreign transaction fee,

This is the best credit card for seniors who love to dine out in restaurants. Apart from that, each time you use your specialized credit card at any restaurant, 10 cents will be donated as charity to AARP.

 

b) Chase Slate

This card is specially made for seniors who like big names. The Chase Slate is a big bank, allowing you a 0% APR for the first 15 months for all purchases and balance transfers. And guess what! It’ll give you the option to transfer balances made within the first 60 days absolutely free.

After the introductory period, the APR maybe 13.24% to 23.24%. Seniors can get monthly FICO score for free, without any annual fee an/or overdraft fee. Apart from that, this card has a 3% foreign transaction fee.

 

c) Chase Sapphire Preferred

The Chase Sapphire Preferred card is one of the best travel credit cards for seniors. It offers the option to earn and transfer points to other loyalty programs. The card is popular among the seniors as it can  transfer points at a 1-to-1 ratio to airline and hotel travel. This specialized credit card gives you 2 points per dollar benefits for seniors on travel and dining.

 

d) Blue Cash Preferred From American Express

This card  offers a rewards program on your first $6,000 of purchases in the first year. Seniors will get 3% back at U.S. gas stations and selected department stores. All other purchases earn you 1%.

The card has an introductory 0% APR. Later the rate will be changed. It also has an annual fee of $75 and 2.7% of the balance will be charged as a foreign transaction fee.

 

e) Capital One Venture Rewards

Do you travel a lot? If yes, then the best option for you being a senior is the Capital One Venture Rewards card. Seniors can accumulate ‘miles’ on every ticket they purchase using this card. The points can be redeemed on airline travel, except on blackout dates.

This card is offering 2x miles for every dollar spent. Seniors may get a 50,000-mile sign-up bonus if they can spend $3,000 within the first three months.

 

f) Barclaycard Arrival Plus World Elite mastercard

Seniors may plan to travel after their retirement. If you are one of them and need a specialized credit card with good benefits to ease up your travel experience, this is the one you are looking for. The Barclaycard Arrival Plus World Elite MasterCard provides you with 40,000 bonus miles if you spend $3,000 within 3 months. It also gives you 2x miles on all purchases and 5% of your miles back when you redeem the miles.

The card comes with a 0% APR for 12 months if you opt for balance transfer within the first 45 days. After that it goes to 16.24% or 20.24%, considering your creditworthiness. The foreign transaction fee is 0%, but after the first year, you have to pay an $89 as an annual fee.

 

g) Citi Double cash card

One of the best credit cards for seniors that takes entry in almost all of the top credit card lists. You’ll get a 1% cashback on every purchase. When you pay off your credit card bill, you’ll receive another 1%.

A 0% APR is applicable for the first 15 months, then the rate will increase between 13.24% and 23.24%. The card has a 3% foreign transaction fee.

 

Conclusion

Credit cards are the most useful money tool in the present era. If we use it responsibly and skillfully, it can help us get great deals, and also save money. Being a senior you must use it as per your need but remember, if it falls in the wrong hands it can lead to financial hardship. After retirement, it’s not wise to experience financial issues due to your foolishness and irresponsibility. As long as you pay your balance in full each month and spend within your means, you are the happiest guy in the world! Enjoy.

Transferring debts is dangerous if you get trapped in it

Transferring debts is dangerous if you get trapped in it

Posted by: consolidatecreditcard_admin on

Credit card balance transfer has become a quite common debt relief option among all the modest debtors of our country.

People started to understand the efficacy of transferring debts from one account to another, long before credit cards came in fashion. Back then, personal loans and payday loans dominated the scene.
So, what people used to do was borrow money from Mr. A to pay off Mr.X, Y, and Z.
And then, slowly pay off Mr. A, over time.

The same thing is about credit card balance transfer.
You take out a new card, and bring all the balances from your existing credit cards into this new card.
Once the transfer is successfully done, you will have only one card to pay off, and enjoy a median interest rate against all your credit cards.
But, it can be dangerous. Balance transfer is no joke, and banks encourage you to do so, as they see a big profit margin in it.
You just might get entangled in this transfer chain forever, if you don’t know how to make it a ‘once and for all’ affair.

Here’s how you might never exit the balance transfer chain:

Banks and financial institutions promote balance transfer to gain money from you. It’s not that they totally want you to become debt free.
When you take out a balance transfer card to pay off your other cards, you are actually letting the new bank have a new income trail.
Most of the banks charge a balance transfer fee.
And, generally debtors opt for this method, when they have too much of debts to pay off.
So, chances are, majority of the debtors doing the transfer, won’t be able to pay off this new card too.
Even if you do manage to pay off this new card, it won’t be anytime soon, and definitely not within the flashing 0% interest rate introductory period.
This 0% APR introductory phase is a big time marketing strategy, that the banks use to sell balance transfer cards.
They know very well that people will get false hopes to pay off their due balances at a 0% interest rate.
Now, just imagine if you, by any chance, are unable to pay off this new card within the introductory period!!
There are high probabilities that this card will be facing a brand new hiked up interest charge over a big outstanding balance!

You might say, you can again transfer this balance to a new card. But how long, will you go on like this?
Plus, what guarantees are there that you won’t be using your old credit cards again, within this transfer period??
Ultimately, you are getting trapped and might never just escape this whole jeopardy, that the big financial institutions lay down for us.
Even if you say, that you will close your old credit cards after you have transferred the balance, then also you will be making another grave mistake.

Closing your old credit accounts is not a good move for your credit health:

The moment you close your old credit cards, your credit history that you have built up till date, gets wiped away. At least something of that sort.
And, once it gets cleared, you have to build your credit history all over again. Now, this takes time!
A washed away credit history will have a huge impact on your credit score. It’s not impossible to see some 200 points drop at times, if all you were having till date are credit cards in your name.
A diminished credit report and a burnt out credit score is a serious condition. You won’t be qualifying for good loans or other credit cards so seamlessly, again!

A well done balance transfer however, still has the power to save you from debts.
But, for that you need proper help and guidance! Consult a lawyer, or someone whom you can trust, that who is in the finance industry.
Don’t get induced by the exciting balance transfer offers you see everywhere.
I would still say it’s better to avoid balance transfer if possible, rather deal with your existing credit cards tactfully.
At times, it’s far better to stick onto what you’ve got, than losing yourself completely in the search of something that has no guarantee of becoming yours.

borrowing-from-the-401k-plan-to-pay-off-debts

Borrowing from the 401(k) plan to pay off debts: Is it worthy?

Posted by: consolidatecreditcard_admin on

401(K) is an employer-sponsored retirement plan that allows employees to save money for their retirement days in a tax-deferred manner. However, when the employee will retire and withdraw the money from the 401(K) plan, he/she needs to pay the tax on it.

How does 401(k) plan work?

401(k) plan is managed by the employers. They decide the type of 401(k) workers can use and, what investments workers can select for their plan. The employers also decide that what investment management firm will run the investment part of the 401(k) plan.

The employee has to sign up for the 401(K) plan usually from the first day of the job.

What are the benefits of contributing money into a 401(k) plan?

Employees can decide how much of their paycheck should be contributed into the 401(k) plan depending on the IRS contribution limit.

They can also select investment vehicles while opening a 401(K) plan. Rest will be taken care of by the employer (Plan sponsor).

One more benefit of contributing money into a 401(K) plan is that it allows the users to take out a loan against their savings. The users can get relatively low-interest rate loan that they can use to consolidate their debts.

So, it is clear that the 401(k) plan is one of the great ways to build wealth for your retirement days.

But, today’s topic is not discussing about the benefit of a 401 (K) plan in detail. Today’s topic is, should you take advantage of your 401(k) account to consolidate your debts?

Should you use a 401(K) loan to pay off your debts?

The answer cannot be said in one sentence. So, read the article to know the answer.

As per the financial experts, taking out a 401(k) loan to pay off the debts should be your last resort. When you have other debt repayment option to get out of debt, then you shouldn’t borrow from your 401(k).

On the other hand, some financial experts say that borrowing money from a 401(k) plan is a less expensive option to repay the debts. If you’re drowning in multiple debts, then you can take advantage of a 401(K) plan.

Why you shouldn’t borrow from your 401(k) plan to pay off your debts

Though a large number of 401(K) users are taking advantage of their plan to get out of debts, the idea of borrowing money from the retirement plan is not good.

Here’s why you shouldn’t borrow from your 401(k) plan:

#You can’t save enough for your retirement

Remember, the major goal of having a 401(K) plan is saving enough money for the time when you will not work anymore. In most of 401(k) plans, there is a provision that prohibits the user from making additional contribution until the loan balance is repaid by you.

#You are not making the profit

If you stop contributing money since you have an outstanding loan, the money is not growing. Also, you will miss the potential growth in the stock markets. The low interest that you are paying to yourself is very inadequate than the ROI that you can get from the market by contributing money thoroughly.

If you borrow a loan from it, then you should double your contribution to make most of it.

#You are losing time to grow your money

The more time you will give in a long-term investment like 401(K), the more wealth will build with time. As per the financial expert’s calculation, the money in 401(K) usually becomes double on average in every 8 years.

But if you take out a loan from the 401(K) plan, then you are losing the time to make up the lost contribution. Because you are repaying the loan for a long period (Usually 5 years). Therefore, you are losing the growth opportunities.

#You may have to pay a withdrawal penalty

If you are below 59 years, then you will be charged an early withdrawal penalty. Also, if you don’t repay the loan, you have to pay the tax on the outstanding balance. So, you could lose more money on your withdrawal.

#You can never retire

If the user is unable to repay the loan after 60 days of the retirement, it will become fully taxable. Also, the user has to pay the 10% early withdrawal penalty. So, if you have a loan, you can’t quit your job without repaying the loan.

Why you should borrow from your 401(k) plan to pay off your debts

You can’t predict your financial life. You can face a financial challenge at any point in your life. And, you may have to take out a loan from your 401(K) plan.

Though you shouldn’t miss the opportunity to build wealth by taking out a loan from your retirement plan, here’s why you should borrow from your 401(k) plan.

Taking out a loan from 401(k) plan to consolidate debts is beneficial because the debtor can get the loan with relatively lower interest rate than the other commercial loans.

When the debtors repay the loan, they are paying back to themselves the money with the interest instead of paying back to a financial institution or bank.

You can repay the loan from your paycheck. You can make the repayment automatic by setting an automated system. So, no chance to miss the repayment on the new loan that you have borrowed from your 401(k) plan.

Usually, commercial loans have a higher interest rate and it takes a longer time to repay the loan. But the 401(K) plan has maximum 5 years term to repay the loan. So, you are repaying the total balance sooner.

If you borrow a loan from your 401(k) plan, it will not be reported to any credit bureaus. So, your credit score will not get any negative effect from it.

Lastly, you shouldn’t invite financial difficulties by taking out a loan from your 401(K) plan when you are about to retire. It will not let you take full advantage of this plan. So, instead of making your retirement days insecure, you should find out other ways to pay off your debts.

have-a-fluctuating-income-here-is-how-you-can-pay-off-credit-card-debt

How to pay off credit card debt on a variable income?

Posted by: consolidatecreditcard_admin on

It is difficult, no doubt, to manage personal finances when you are having a variable income.
Or, in other words, if you don’t have a steady paycheck on a timely basis.

Then, things get even worse, when you have racked up some big consumer debts like credit cards, personal loans, and all.

What to do then! Does it mean that people, who don’t have a steady income, should not use credit cards?!

Definitely not!

That’s why we have come up with this unique blog post for you, that will precisely help you deal with credit card debt when your income is not fixed.

So, let’s carry on with the guide, and point out some very basic ideas to straighten up your credit card payments!

Take a year’s example to understand your net annual income:

This I believe you are already doing it. If not, then you better do it, before things start falling apart.

You can be freelancing, have your own startup, or might be into some business. But, you should have a rough idea on what your annual income is.

Go back 2 to 3 years, and see how much you earned annually. Some few hundred dollars difference is not a problem, but a gap of some thousand dollars mean you need to reinvent your business strategies a bit.

You need to make sure that each year, your net income should fall within a fixed margin. The target got to be pretty clear, that by the end of each year, you are bringing in roughly the same amount of money.
That’s your call, and it depends on you, how you will do that!

Understand the credit cards you have and the payments they require:

Credit card debts are like damsels in distress that require special attention. The more you ignore them, more will they swell with anger, that is grow red on interests!

But, your income is not stable. A big reminder for you, every time you look at the bills.

Now, the best thing you can do is getting an overall idea, that how much percentage do the credit card payments demand, of your total annual income.

If it comes around 1/3rd of your net income, then you seriously need to regulate your spending behavior!
A credit card payment that makes up more than 30% of your income is not at all a good sign.

But whatever! You got to deal with the situation. And this brings us to our next most vital step.

Keep aside the same percentage of money each month, for credit card payments:

If your credit card debt requires 25% of your annual income, to be paid off in full within one year, then here’s what you need to do.

Each month, no matter whatever you earn, you keep aside 25% of it, for your debt.

Now, if you earn $1, then separate 25 cents for the credit cards. Sounds funny?? Well, that’s what you exactly got to do, my friend!

It’s like a lot easier, if you understand this simple math:

Let, your incomes for twelve months be, X1, X2, X3, X4, X4, X5, X6, X7,……. X12!

Now, (X1+X2+X3…… +X12)= Total annual income (A).

So, if 25% of (A), is all your credit cards want, then give it to them.

That will be,
25% of (X1+X2+X3…… +X12) = 25% of (A).
And, that means,
[(25%of X1) + (25%of X2) + (25%of X3) + (25%of X4) +………+ (25%of X12)] = 25% of (A).

Thus, irrespective of your salary, per month, you deduct the same percentage for credit card payments.

But, the only thing you really need to take care of is that, your predicted annual income, the year you are doing the calculation for, should not ditch you!

Give credit card debt consolidation a big-time thought:

Be it you have a fixed income or variable income, debt consolidation is the master plan you can always take shelter of.

Highly effective when you are dealing with unsecured debts, especially credit cards.

If you think that your monthly payments are really high, and if only you could extend the course of payments, by lowering your monthly amounts, then debt consolidation is what you are really talking about.

This unique debt relief process works out best when you enroll in a debt consolidation program  with a consolidation company. They will talk to your creditor, and try to make some shiftings and arrangement to your credit card payments, based on your affordability.

Once the deal is successful, you will have to just pay the consolidation company, some minimized amount each month, which in return the company will disburse among your creditors, as per the agreement they made.

Debt consolidation will surely lower the payment burden quite significantly. So, be wise and talk to a consolidation company as fast as you can.

Once the monthly payments get lowered, you won’t have much problem paying off the credit card debt on variable income.

The final step to take, is always increase your income, and get a steady cash inflow:

Big investors, well-off businessmen, and good entrepreneurs, all have debts around them. But, rarely you will find them so freaked out about their debts.

The hidden truth is, even if they are self-employed, they still try to maintain a steady income.

On the other hand, however, if your income is season based, like woolen products or commodities and all, then try to expand your products range.

Now, we can’t discuss over here how to expand your business! I believe I have done my part.

Best of luck, and do follow the tips I gave you throughout the post. If required go through this post again and again, in order to understand the simple maths, I explained.

is-the-60s-and-70s-rock-lifestyle-to-be-blamed-for-current-US-debt

Is the 60’s and 70’s rock lifestyle to be blamed for current US debt?

Posted by: consolidatecreditcard_admin on

There must be some kind of way outta here

Said the joker to the thief

There’s too much confusion

I can’t get no relief

Businessmen, they drink my wine

Plowman dig my earth

None were level on the mind

Nobody up at his word

Hey, hey”

……………………. All Along the Watchtower.

Pretty tough man, pretty tough! There ain’t no words to describe the blast, that happened in the decades of 60s and 70s.

A new wave of culture that redefined the forms of Arts, Science, Philosophy, Music, and anything you name!

It was a movement! A mass upheaval of a chaotic situation, that questioned rules, peace, war, and most notably, Love!

But it was this Rock and Roll amongst all, that brought the significant changes into how the world worked, as musical and artistic acts like Elvis Presley, Bob Dylan, Allen Ginsberg, Jack Kerouac, The Doors, Lynyrd Skynyrd, Andy Warhol, The Velvet Underground, The Rolling Stones, Jimi Hendrix, Janis Joplin, The Beatles, and so and so, came into the picture.

The time was the high heat of 1960s and 1970s. The World Wars were over. Big politicians and diplomats were busy fighting the unnecessary cold war! And, in the middle of nowhere, popped a mushroom. Large enough to shed everything that came in its way!

This mushroom took the shape of a different dimension of thoughts and actions. This was the rock lifestyle of the 60s and 70s. The hippie age.
The age where music and drugs wiped the streets. The age where people loved to dance to the end of love.
And an age, where the last thing the youths cared about was money.
It was an age of realization, spiritualism, psychedelics, opening the doors of perception, intelligence, and intellectualism!

But they lost the track! As per the words of Karl Hyde’s song, Born Slippy, the hippies had chemicals grown so close to them, that they forgot the fact, that this world still finds solace in worldly and materialistic objects!

And, that’s exactly when the whole thing went wrong, economically.
The effect of which we are still bearing, enormously.
It is the current US debt.
But, will it be ethical to blame the culture of the 60s and 70s solely for today’s American debt?

Let’s evaluate.

Understanding the Baby Boomers- the initiators of the hippie movement:

Am I missing out on anything? The Silent Generation or the Lost Generation or anything as such? No, I guess not.

For they had their share already. The lost generation actually got washed away by the start of World War II. This generation was followed by the Silent Generation.

Both these generations witnessed the 2 great world wars, and both succumbed to the great depression of the roaring 20s.

Obviously, we can never erase scars, and effects the world wars had on the economy is still reflected. Believe it or not, it’s more or less like the butterfly effect, where one event results to an effect, that triggers several other series of events.

These continuous events created by the age of depression, the world wars, and the start of the cold wars, led to an amalgamation of frustration among the youth of the late 50s and early 60s. They strived to cut loose the social chains of rules, regulation, controlled speech and all!

And, these young fellows were the baby boomers! They just wanted to break on through to the other side!

Most of the baby boomers’ parents were servicemen, soldiers, army men, law-abiders, and definitely were on the stricter side. As much as we have heard, the silent generation was busy in building wealth and securing a systematic future! This generation wanted peace with the help of civilization, family ethics, and rules.

But, their children, the baby boomers, felt suffocated as the cold war was prevalent both in the countries and in the houses. This suffocation led to a big blow out!

And, that’s what turned them into hippies! Hippie might sound like a mellow word, but this word really broke through that time I tell you.

Examples include Elvis Presley, Johnny Cash, Jim Morrison, Jimi Hendrix, Hunter. S. Thompson, Janis Joplin, The Grateful Dead, Bob Dylan, Lou Reed and all!!

The England side included Pink Floyd, Led Zeppelin, The Black Sabbath, Marc Bolan, and this could just be endless if I keep on going, and if you keep on reading!

So, the point is, these kids wanted a great and good ol’ party time. They saw enough of suppression, and rock and roll just acted as a sedative and a stimulant at the same time. If not anything, at least this ‘music-and-culture’ spoke of freedom, spoke of love, and spoke of happy memories, that brought rain into the then dry world!
Even if the rain was ‘acid’!

Understanding the Generation X, the punk, and the economic breakdown that followed:

The rock and roll craze was about to collapse, as substance abuse, debt, relationship chaos, and a feeling of guilt started to cover the baby boomers.

It was now time for their kids to question the past and answer for their mistakes. Many rock stars of that era suffered depression, isolation, ill financial health, and a collapsing burden of fame.
The Club 27 took place, as many influential and promising figures started to fade away at very young ages!

In the meantime, the Vietnam war ended and the soldiers returned home. There were memories of Woodstock, and the storm of the hippie wave was about to go silent.

It was time for them hippies’ kids to take charge of this world! These kids came out more charged up. More metal headed, and punk souled than their ancestors. Loved to experiment with everything available.

They started to change the face of rock lifestyle into something more intense and robust. Notable genres and artists that ruled the culture and lifestyle of this era include, Punk, Glam, Pop, Techno, Shoegazing, The Sex Pistols, The Smiths, heavy metal, death metal, Indie, The Motley Crue, Aerosmith, Nirvana and all!

Now look at them yo-yo’s that’s the way you do it

You play the guitar on the MTV

That ain’t workin’ that’s the way you do it

Money for nothin’ and chicks for free

Now that ain’t workin’ that’s the way you do it

Lemme tell ya them guys ain’t dumb

Maybe get a blister on your little finger

Maybe get a blister on your thumb

We got to install microwave ovens custom kitchen deliveries

We got to move these refrigerators we gotta move these color TV’s

See the little faggot with the earring and the make up

Yeah buddy that’s his own hair

That little faggot got his own jet airplane

That little faggot he’s a millionaire”

………………….. The Dire Straits, Money for Nothing.

The hedonistic mottos of this age, that preferred luxury, pleasure, happiness, ecstasy, and courtship gave economy, savings, wealth, and investments the least importance. This period had elongated nights that saw gangsta rap, discs and pubs taking up most of the education!

The hippie movement continued but in a whole new different shape and size.

And, this was the time, Credit Cards started to rule the market. It increased the buying power of the people with reckless money habits.

Then came the housing crisis:

The 1987 Tax Reform Act and the Taxpayer’s Relief Act of 1997, made housing seem the only profitable investment, as tax deductions for interest amounts on consumer debts, were cleared out.

With little knowledge gathered on finance and economics in these two generations, people started to take out subprime mortgages at a huge rate.

Due to a havoc and wrecked up lifestyle, that only few people were successful at, many went through unemployment!

Even notable figures and bands like Johnny Cash, Bob Dylan, The Doors, and other contemporary celebrities went through severe times of bankruptcy, social and rehab issues.

If at one part, something was rising (what became the golden age of modern music, science, arts, and spiritualism), then, on the other hand, the whole mass was falling down! The world was losing its balance!

And, haphazard financial decisions just occupied the minds of the young adults. An act of desperation, maybe! It’s the first decade of 2000s and big financial institutions like Layman Brothers, for instance, went underwater.

Entering into the current national debt scenario:

So, here we are today.
As our past ancestors did little financial planning and wealth building, we have only learnt to make amends with debts.

We rely on credit cards, loans, and secured debts, for making our financial grounds independent. Doing Savings has never quite been the prime priority of the American Dream or the San Francisco acid wave!

One domino that fell down in the 60s and 70s, has been continuously pushing the dominoes coming in line, one by one.

Today USA holds the majority of the global debt! Nearly $20 trillion of global governmental debt. Where’s gone the psychedelic dreams when economy is concerned?

All seems to be a big misfit.

We really don’t know what reasons are hiding at the central eye of this economic deficit we are facing. Is it the poverty of the world wars?
Is it the total abandonment of money and commerce during the rock n’ roll era?
Is it too much substance abuse, con, and gang activities that funneled the enormous national debt?
Or is it the pointless blaming one generation does on the other?

The answers from the past do reflect the collapse of this economy. So many things are still left to be pointed out in this post!

But all I can say is, history repeats itself.

And, it is upto us the Millennials and Generation Z, to fight for our country’s economy.
We need to be the sensible game changers, our forefathers fought for. Even though many failed to cope up with the rush back then, still many were able to show us a bright future made of love and peace.

I believe if only we can just straighten up our personal finances a bit, then all problems are solved, and we will flourish as a supreme civilization!

Master the art of moderation and be debt free, my fellow current American generation!

“When I’m counting up my demons

Saw there was one for every day

With the good ones on my shoulder

I drove the other ones away

If you ever feel neglected

If you think all is lost

I’ll be counting up my demons yeah

Hoping everything’s not lost

When you thought that it was over

You could feel it all around

Everybody’s out to get you

Don’t you let it drag you down”

……………………………………….  Everything’s not lost, Coldplay.

Below is a table showing the rise of Gross Public Debt, from the fiscal year 1950, till the present 2018, at a 5 years gap:

Fiscal Year Gross Public Debt
1950 $256.85 billion
1955 $274.37 billion
1960 $290.53 billion
1965 $322.32 billion
1970 $380.92 billion
1975 $541.93 billion
1980 $909.04 billion
1985 $1.8 trillion
1990 $3.2 trillion
1995 $4.9 trillion
2000 $5.6 trillion
2005 $7.9 trillion
2010 $13.5 trillion
2015 $18.12 trillion
2018 $21.46 trillion

Source: www.usgovernmentdebt.us

How-to-do-debt-consolidation-efficiently,-all-by-yourself

How to do debt consolidation efficiently, all by yourself

Posted by: consolidatecreditcard_admin on

Debt consolidation approaches are increasing with the rise of household debts and unsecured debts in our country!

But, most of the consumers, who want to do debt consolidation, don’t actually understand how this debt relief process actually works.
Many who choose to consolidate debts, do so with the hope of a better financial future, without knowing the ins and outs of the process.

They see the jolly internet ads and the razor-suited financial advisors burping out complex words, like ‘consolidation loan’, ‘credit score boost’, ‘single payment’, and so on, which make them confused.
Plus, many take help of a consolidation company to become debt free!
They just seem to be so ignorant of the hidden truth, that you can actually consolidate debts on your own without taking professional help.

Welcome to this post that we have created exclusively for you, if you want to know what debt consolidation is all about, and how to do it all by yourself without asking help from third parties.

Let’s begin!

A precise breakdown of debt consolidation as a starter:

Before I brief you on how to go about DIY(Do It Yourself) debt consolidation, let me first introduce you to debt consolidation in the easiest words possible!

By consolidation we mean, bringing various components and materials into one place. This can also mean summation.

It’s like instead of keeping $50 in one pocket, $20 in the other pocket, another $30 in the back pocket, you keep $100 in one single pocket!

So, with debt consolidation you bring all your debts into one single place, and rather than having multiple debts to keep track of, you only have one amount to chase.

That’s the beauty of debt consolidation. It feels like you are building a new block of bread by joining the slices!

An example will clear it out even more.
Suppose you have 1 credit card debt, 1 personal loan debt, and 2 payday loan debts. This makes you to do 4 distinct payments each month for each of your debts.
With debt consolidation, you get to bring in all your debts together and thereby left with only one monthly payment instead of 4 different ones.

But, the issue that you got to deal with is, how can you bring all your debts from different lenders into one place?!

Well, it’s pretty easy actually! Remember poison kills poison! That’s the same case down here.

You take out a big debt that covers all the amounts of the debts you plan to pay off!

With this new debt, you clear each and every one of your existing debts. Pay them off in full, and kiss them goodbye.

Thus, you are now left with a single amount to pay off, that too at a lower interest rate than the combined average of the existing interest rates. Sounds good? That’s exactly what we call debt consolidation.

A process that you can simply do it yourself, and thereby manage debts keeping your head held high!

But, but, but— there’s one thing that I was just skipping out on. From where will you get this big fat amount, that will wave off your debts?

Believe this brings us to our next part:

Best ways to consolidate debts on your own

a. You can take out a consolidation loan or a personal loan:

Taking out a loan for paying off old debts, is the most sought after option for DIY debt consolidation.

There are many banks and credit unions that offer these loans especially for customers who are having difficulty to pay off debts.

The credit score check and qualification rules for these loans are pretty lenient when compared to other conventional loans.

Also, the interest rates on these loans are quite moderate. But, it’s better if you take out a consolidation loan from the bank with whom you have your existing credit/debt accounts.

Banks love to work with existing customers. So, you can expect more decent and favorable loan terms if you take out the loan from the same bank.

However, if you plan to take out a personal loan, then you can do so, but remember personal loans are costlier than consolidation loans.
I would always suggest going for consolidation loans over personal loans, as loan terms are better with the former.

b. Try balance transfer for credit card debt consolidation:

If all you have is credit card balances to pay off, then it’s better you choose credit card balance transfer.

Unlike a consolidation loan, here you will take out a new credit card or use an existing card of yours having nil or very low balance. On this card, you will transfer all your existing credit card balances.

By doing so you will eliminate all your previous credit card debt, and have only one card to pay off. Interestingly, credit cards that are designed solely for balance transfer, also carry a 0% or low APR introductory period that can extend, at times, upto 20 months or 2 years.

So, after you have transferred your balance, you will now have a single card balance, with barely any interest charges during the introductory rate period.

c. You can access your home’s equity:

This is a very crucial decision you can make, if you are too desperate to be free from debts.

You have two options if you want to compromise your home’s equity to pay down debts. One is, you can take out a HELOC (Home Equity Line Of Credit), that functions like a credit card.
The other is, you take out a Home Equity Loan which is just like any other conventional loan.

But you have to consider the fact that you are turning all your unsecured debts into a secured debt, by choosing to access your home’s equity for debt consolidation.

Why?

Because the debts which are bothering you are unsecured debts, like credit cards and payday loans.
Once you take out a home equity credit and pay off these debts, you will be left with an asset-backed credit!

And if you start to default on the payments of the Equity Loan or the Equity Line Of Credit, then you are jeopardizing your house. That’s so, as your equity is the collateral for these two forms of credit.

Hence be wise, and only try this, if your above two options of ‘consolidation loan’ and ‘balance transfer’ are closed or insufficient to pay down your debts.

Else there are high chances that you might have to lose your home!

d. You can borrow money from retirement accounts and insurance cash-value:

This one’s probably the riskiest tool to use for debt consolidation.

You are compromising your retirement savings or the cash value that’s your whole life insurance has been building over the years.

You can definitely borrow from such financial tools, but it’s very risky. So, it’s better you discuss with a financial advisor about whether or not you should pull out money from a 401(k) or your life insurance policy.

With this, we come to the end of our discussion.

But, before we leave this page, here are a few one-liners you must pay attention to, for accomplishing the best DIY personal debt consolidation:

1. Any new form of credit, that you are about to take out for consolidation, must carry an interest rate significantly lower than the debts you plan to pay down.

2. You should not start to default on the new credit, else things can get really complicated later on.If things don’t go as planned,  you can always turn toward the best debt consolidation companies, who are authentic and will help you out of this mess!

3. Debt consolidation is only possible with unsecured debts. For secured debts, like mortgages and all, you will have to choose refinance or loan modification.
But, that’s a completely different topic to discuss!