Almost everyone who has a reasonably good credit score is sure to be bombarded with credit card debt consolidation junk mail from all kinds of institutions offering to help in the debt consolidation process. Some of these junk main advertisements may even carry the name of a well known company, like GE Capital, for example. But this does not always mean that that company is affiliated with the one that is offering to consolidate your debts for you.
Companies may be able to use the known of a well known financial institution if they once were one in the same buy have since split off to become their own company. These companies are not necessarily lying; they can indeed help you get your debt and other financial matters into order. Credit card debt consolidation, however, may wind up causing your credit score more damage than you originally bargained for.
Remember the old adage, “If it’s too good to be true, it probably is.” Keep this in mind when credit card debt consolidation companies try to make the process seem so easy and helpful.
Advertisements often include check-like documents that claim to just give you a relatively large amount of money that you can invest in your debt elimination plan. That sounds great, but that large amount of money comes from an equity line of credit that the company offers you as long as you are willing to put your home up as collateral. Using such equity credit lines in an effort to consolidate credit card debt is not wise.
Lines of credit are used for major expenses like college for you children or remodeling your home. Plus they are tied to your home’s mortgage and you do not want short term debt like credit cards to turn into a long term obligation. You can just throw those offers in the garbage.
What About Refinancing
You can also consolidate your credit card debt by refinancing if you are a homeowner. This is not the best option either, but it certainly can work if you find yourself in a financial bind. Refinancing your home means extending your mortgage back out to thirty years, but this time for a smaller amount. Your loan would be for the amount you still have yet to pay on your mortgage plus the amount of money you need to consolidate your credit card debt.
Even though this method of credit card debt consolidation means that you get stuck with a thirty year loan, your payments will surely be lower than they used to be and your credit card debt will finally have been eliminated.
Author: Michael GeoffreyThis author has published 6 articles so far.