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Credit card debt consolidation, see if it's any good

If you are struggling with your credit card debt, a nonprofit debt consolidation company can help. A nonprofit debt consolidation company will contact your credit card companies to reduce the interest you pay on your credit card balances. As a result, you will have to pay a smaller amount of interest each month. Lowering your interest charges will help you pay off your credit card debt.

Another significant benefit is the convenience you will get. The company will take away your entire monthly payment and pay the amount owed to each credit card company separately. So instead of going through the hassle of making multiple payments, you can pay the full amount for the month to your nonprofit debt consolidation company and let them take care of the rest.

deuda de tarjeta de crédito (Foto: Pixabay)
credit card debt (Photo: Pixabay)

What is nonprofit debt consolidation?
Nonprofit debt consolidation companies are, as the name implies, nonprofit organizations that can help you pay off your debts. They usually deal with credit card debt. Since they do not make loans, you cannot refinance student loans, auto loans, home loans, or similar loans with these organizations.

However, since they are non-profit organizations, they must operate according to the rules and regulations set by the government in order to maintain their non-profit status. This high standard can work in your favor and help you get out of the debt trap.

National Foundation for Credit Counseling
Several of the leading nonprofit debt consolidation companies are members of the National Foundation for Credit Counseling (NFCC), which is the oldest and largest financial counseling organization in the United States.

The NFCC and its members have a mission to promote responsible financial habits through their advisory services. They also educate ordinary consumers about good personal financial habits. Member organizations also certify and train professional counselors to offer their expertise in the fields of student loans, home buying, wealth management plans, credit card debt, and bankruptcy due to coronavirus.

All NFCC members must be accredited by the Council on Accreditation (COA). The COA is an independent organization that reviews social service programs around the world.

The Debt Management Plan
To come up with a workable debt management plan, nonprofit debt consolidation companies often start with free credit counseling. They will then list several options that can help their clients become debt free.

nonprofit debt consolidation vs. debt settlement
The process is fairly simple. The nonprofit debt consolidation organization will first understand your specific financial scenario to create a budget, and then list options that can help you achieve financial freedom.

The initial credit counseling session can last approximately one hour. During this session, a certified financial advisor will listen to your challenges and needs, then develop a personalized strategy to pay off your debt. These counselors have experience in budgeting, debt management, and consumer credit.

The nonprofit form will only include you in their debt management program if you qualify. Not everyone qualifies for these programs. The nonprofit organization will help you with your spending habits, budgets, and other aspects of personal finance.

They can suggest a debt consolidation loan or help you find another way to navigate the debt consolidation process. credit card debt,, depending on your situation. If your financial situation is too dire, then they may recommend bankruptcy.

Read More: Specialist establishes rules for those who want to pay their debt

How does it work
This is how a debt management program works. The nonprofit debt consolidation company negotiates on your behalf to reduce your credit card debt, unpaid They try to lower the interest rate and combine all the debt into one. In many cases, they can reduce the interest rate by 8 to 9 percent. Sometimes they can lower the interest rate even more.

These measures will help you pay off your debt more quickly. A key advantage of working with a nonprofit debt consolidation company is that you don't need to get an additional loan to pay off your debts, which could easily add to your problems.

 

Ways to pay your credit cards amid the pandemic

If you are one of the approximately 110 million Americans who have debt Credit cards during the Coronavirus pandemic, you may be wondering how you can pay your bills during this unprecedented economic crisis. While debt is always stressful, it's even more difficult to manage in these uncertain times when millions of people are losing their jobs or are temporarily laid off.

If this applies to you, it may seem like the road to debt freedom is harder to achieve than ever before. It is important to note that whatever debt reduction strategy you choose, now is also the time to approach your issuer to explain your financial situation.

tarjetas de crédito (Foto: Pixabay)
credit cards (Photo: Pixabay)

Debt reduction strategies during an economic crisis:
1. Apply for a balance transfer credit card.

You may be wondering, "How can applying for another credit card solve your debt? Credit cards

While it may seem counterintuitive to apply for a new credit card when battling high-interest credit card debt, it's important to note that a balance transfer credit card offers several benefits that can help caregivers struggling with the debts.

A balance transfer card that allows you to transfer a balance with a high APR to a new account with a predetermined introductory period of low or no interest, sometimes up to 21 months. The benefits of a balance transfer card are undeniable. With a 0 percent APR add-on period, it's easier to address debt through manageable monthly payments without the burden of additional interest. If you have a high balance on your credit card that you can't pay off, a balance transfer may be a good option for you.

It's important to know that with most balance transfers, you won't be able to transfer a balance within an issuer's network. For example, if you have a high balance on a Citi credit card, you won't be able to transfer it to another Citi card.

2. Snowball method
If you are looking to deal with the debt of your Credit cardsHigh interest rate without opening a new line of credit, snowballing debt may be a good debt reduction strategy to try.

The snowball method is simple: You zero in on the smallest debt you have (regardless of APR) and work to pay off that debt as quickly as possible. Once you've paid off the smallest balance, you start concentrating on the next smallest balance. You continue this process, while making the minimum payments on the accounts you are not concentrating on, until you have eliminated all debt from your Credit cards.

Perhaps the greatest benefit of the snowball method is that it allows you to see the progress being made in reducing your debt. If you're making scattered minimum payments to multiple streams of debt, it may seem like you're never making progress toward debt relief. However, if you start with your smallest debt, you will quickly see the results of your effort as the balance dwindles.

What to know if you plan to use the debt snowball method:
One downside of the debt snowball is that it doesn't take interest rates into account when paying down debt. If you snowball debt and tackle smaller balances first, regardless of interest rate, you risk spending more money on interest in the long run.

3. Avalanche method
Unlike debt snowballing, the debt avalanche method focuses on paying off the balances with the highest interest rate first, and then successively paying down the remaining debt in the order of the highest interest rates. high to low.

The avalanche method allows you to tackle high-interest debt first, which can help you reduce your total debt and added interest over time. However, as with the snowball method, the debt avalanche will only be effective if you continue to pay the minimum balance on all accounts while prioritizing the balance with the highest interest rate.

Read More: Things to consider before taking out the credit card

What to know if you plan to use the debt avalanche method:
The debt avalanche is an effective method to reduce the debt of the Credit cards, and by prioritizing the balances with the highest interest rates it can save you the most money in the long run. However, one drawback of debt avalanche is that you don't see the same quick results as with the debt snowball method. Paying off balances based on interest rates requires patience and can be difficult to maintain if you have multiple accounts with high balances.

final thoughts
If you, like so many Americans today, entered 2020 with debt of Credit cards, the stress of keeping up with your bills during the Coronavirus pandemic can seem overwhelming. Following a debt reduction plan like the avalanche or snowball method is a good way to both keep your finances in order and see results as you work to reduce your overall debt.

However, if you are facing extreme financial hardship, you may not be able to make even the minimum payments on your debt with Credit cards. If this is the case, methods such as the debt snowball or debt avalanche may not be realistic as they aggressively prioritize

Understand about consolidating credit card debt, is it worth it?

When the credit card debt starts to build up, it can be scary. Outstanding balances and compounding interest can quickly lead to debt problems that feel unmanageable. One possible solution is to consolidate the credit card debtbut is it a good idea?

First things first: If you're having debt problems, it's best to talk to a nonprofit debt counselor. For more information on how to get out of debt, check out our guide.

deuda de la tarjeta de crédito (Foto: Pixabay)
credit card debt (Photo: Pixabay)

The consolidation of the credit card debt It can take two forms: an interest-free balance transfer credit card or a debt consolidation loan. To get a balance transfer card, you usually need to have a "good" credit score. If this option is of interest, check out our article breaking it down for you.

However, if you are more interested in a consolidation loan credit card debt Let's take a look at whether it's a good idea and the steps you need to take to get it.

When does debt consolidation make sense?
Consolidate the credit card debt with a debt consolidation loan means that you will then only have one lender to pay monthly. Your credit cards will be paid off with your loan, and you can focus on making one monthly payment.

Whether or not a debt consolidation loan is a good idea depends on your personal circumstances. Here are some scenarios where it might make sense:

Taking out the loan reduces the total amount you must pay. One thing to consider when taking out a debt consolidation loan is whether you will end up paying less than before. While your monthly payments may decrease as a result, you may find that due to the set-up costs and length of the loan, you actually end up paying more in the long run.

When you use it as an opportunity to cut your expenses and get back on track. You will only really feel the benefit of this type of loan if you cut up your credit cards after you have transferred the debt. If you don't, and you keep spending on them, then you could end up racking up even more. credit card debt.

When you can afford to keep the payments until the loan is repaid. If you take out a secured debt consolidation loan and don't keep up with your payments, you risk losing your car or home. So if you think something in the future may mean you won't be able to make your payments, like rising interest rates or a lack of job security, then a debt consolidation loan probably isn't for you. a good idea.

How can you consolidate your credit card debt?

Read More: Specialist establishes rules for those who want to pay their debt
If you think it's a good idea to consolidate the credit card debt then the next step is to calculate what you owe. Basically, this is what your total outstanding debts are including interest. This will allow you to have a better understanding of your situation when you are comparing whether or not debt consolidation will save you money.

Then it's best to contact a non-profit debt counselor from somewhere like the debt charity StepChange or the Citizens Advice Bureau. They will be able to advise you if debt consolidation is a good idea or if there are other options available to you that may make more sense.

After that, if you still want to go ahead with a consolidation loan credit card debt, then you can use comparison sites or apply directly to one of the high street banks*. Be sure to check the interest rate and any fees on the loan to understand the total cost. Some comparison sites will also have an eligibility checker, which will perform a "soft search" for you, which won't affect your credit score.

Ways to analyze your financial situation if you are employed

The covid-19 pandemic has caused many people to have a crisis in their financial situation. However, not everyone is feeling the pinch. Not yet, at least close to a quarter of the population of the United States affirmed that the difficult crisis generated by covid-19 did not affect it did not affect your finances.

According to a survey by JD Power carried out on April 10, 11 and 12. However, this figure may change with possible wage cuts by companies. Also, if companies lay off workers or halt 401(k) programs as they struggle to adjust to the so-called new normal.

Those who have the opportunity for financial stability right now should use that time of social distance to focus on getting out of the crisis in the best possible way.

Here are four tips that can help you reorganize while you're home.

Formas de analizar su situación financiera si está empleado
Ways to analyze your financial situation if you are employed (Photo: Internet)

4 tips to reorganize your financial situation

 1. Turn your expenses into savings

His car is stopped. He can't go to CrossFit or yoga. Your coffee is now prepared at home. As well as daily meals. This money you are saving could be eaten (literally) by your hungry children back home this time too.

If you don't have children, use this money to build up your emergency reserves. In a way, you would have three to six months worth saved in your emergency fund. If you feel intimidated, start with a single month, then increase to two and go from there.

If you already have a healthy emergency fund, you can use this money that you would normally spend on things like commutes, gym memberships, or travel to pay off debt or build your retirement fund.

2. Increase your 401(K) contributions

If you don't have a lot of credit card debt and have a solid emergency fund, consider increasing your retirement savings.

If you were already planning to maximize 401(k) contributions this year, doing so at a time when prices are low will increase your returns when the market eventually rebounds.

3. Save money on your mortgage to maintain your financial situation

If you're a homeowner, run the numbers on the refinance. You may be able to minimize your housing costs due to lower interest rates. Even new homeowners could benefit.

Well, mortgage rates are one percentage point lower now. Rates that are lower indicate a higher demand for refinancing. It can be even more difficult to qualify than a few months.

 4. Give back to your community

This advice will technically not improve your financial situation, however it will make a big difference to the community where you live. If you are still financially healthy during the pandemic period, support small businesses.

Donate to food at your local aid bank. Support the people most affected by the financial crisis we are experiencing.

Read More: In uncertain times, prepare your financial situation in a few steps

Personal finances in these difficult times, see tips

At a seemingly glacial pace, Americans are shifting their attention from the health aspect of the COVID-19 crisis to their household finances. In doing so, many financial consumers don't like what they see. According to a recent study by Resonate, a data marketing company, 80% of respondents say they are most concerned about their personal finance at this time (5,000 Americans were surveyed by the company).

Additionally, Resonate reports that…

finanzas personales (Foto: Pixabay)
personal finances (Photo: Pixabay)

61% of consumers say their spending has decreased as a result of the COVID-19 situation.
34% of people are less likely to remodel or renovate their homes.
The 32% is less likely to buy a house.
24% are less likely to ask for a personal loan.
20% are less likely to leverage new financial services.
With so many US households taking a closer look at their spending habits during the pandemic, what steps might Americans take when they finally start to cut back?

Financial experts point to these budget tightening strategies, for now and for the long term:

Prioritize needs over wants. As you reflect on what expenses to cut, you are likely to see some household budget items for your personal finance, that you like but that you can do without.

Cuts of all categories. When cutting expenses, people's natural tendency is to focus on which category of expenses they can afford to cut.

Read More: 4 ways to organize your personal finances quickly

"The best approach, though, would be to cut all household expenses equally, so you don't feel the sting," said Freya Kuka, founder of the blog personal finance Collecting Cents. “In other words, don't cut an entire category from your budget because you're just going to inevitably end up underperforming. Find ways to cut expenses in each category.”

– Top retirement fears and how to deal with them

Save money that you are not spending right now. Americans are home and not going anywhere yet, so it's easier to cut household expenses during lockdown.