Credit Card: Risk Or Reward

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Before understanding the concept of credit card debt, the word debt must be clarified. There are two kinds of debt, one people take unintentionally on the name of luxury and show off such as credit card debt or the money you pay in form of EMI. Second kind of debt people take intentionally but most unwillingly because of some tragedy or emergency. So to clarify credit card debt, it is a kind of debt people take joyfully. They do not count it as debt but they mark this plastic card as a symbol of status. It’s fine to follow trend but on the name of fashion and trend you cannot avoid the fact that credit card gives you opportunity to shop anything but obviously you have to pay for it including interest rate if not taken care of. If this card is used properly and logically it is a reward for people but if someone uses it without using skills he will surely be in trouble.

Credit card debt is most common debt today. If you cross the limit of one credit card and unable to pay it there is still hope to manage it by yourself by compromising some luxuries. But if you over the limit of many cards and its beyond your reach to manage them then credit card loan consolidation is the only option.  Consolidation loan helps in multiple way, this loan consolidate your all creditors under one loan. Consolidation allows you to pay less money but takes years. This process makes easy to make payment but the APR of this new loan must be less than previous loan. This loan helps you reduce utilization ratio, within three months of this loan you will found your improved credit score. Because now you are less using your card.

There are other sources also to satisfy credit card debt so why consolidation is best among them? Yes there are various option like personal loan which you can get at least interest rate. Home equity loan is another option, this was the most trendy way few years ago to consolidate any debt. This loan reduce your interest rate to minimum but yes your property will be at stake. Balance transfer is also the best way to release any credit card debt but it works when you have one credit card debt and still not lost your good credit score. These all are good tools but only if you have enough earning source. You can settle your debt by debt management companies but they cannot hold your matter for longer. If you missed to pay on time according to their term matter goes on the hand of collection agency. These agencies settle your credit and reduce all fine charges but spoil your credit for at least 7 years. Only consolidation is simplest and safest way to have debt free life. By consolidation you will be in better position, once you cleared your credit card debt, temptation for using credit card often will again put you in danger. Consolidation never means you are totally out of debt. You are still in debt but you just moved it that’s it. If you are too much weighed by several credit cards then debt consolidation is the only helpful way to get out of everything at one stroke.

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