Eliminate Debt with Credit Card Consolidation

By on | Credit Card Debt Consolidation Information.

As Americans have struggled to make ends meet during the ongoing economic recession that began in 2008, they have also faced an unemployment rate that has hovered near 10 percent. Going into the economic downturn, many consumers carried existing credit card debt, and in order to survive, they have run up more over the past three years. A high number have now maxed out their cards, and are fighting to just stay ahead of accruing interest. In a hole like that, living debt free seems like an unattainable dream.

Americans Have Changed Their Attitude Toward Personal Finance

Without question, the recession has changed Americans’ attitude toward debt and credit. More people are paying cash for everything and sharply curtailing their purchases, driving their cars longer, taking at-home “staycations,” and forgoing luxury buys.  A generation that has always swiped its plastic cards with abandon now wants to live debt free, but struggles under what seems to be an insurmountable load.

Some recent statistics about credit cards in America show that the goal of eliminating debt is, for many, a long uphill climb:

  • Approximately 181 million Americans are credit card holders, up from 159 million in 2000.
  • U.S. consumers hold in their possession some 609.8 million credit cards, with the average per person at 3.5.
  • The average APR on a new card is 14.89 percent; for a card with a balance 13.10 percent.
  • 98 percent of revolving debt in the United States is represented by credit card debt.
  • The total for that revolving debt as of May 2011 was $793.1 billion.
  • The 30-day credit card delinquency rate in the U.S. is 3.3 percent.
  • On average, the national default rate on credit cards in January 2010 was 27.88 percent.

Because so much of the problem lies with multiple cards, with multiple interest rates, and multiple payments schedules, credit card consolidation offers a way to streamline debt.

Benefits of Credit Card Consolidation

Creditors will agree to arrangements that will allow consumers to pay their debts for one simple reason: they want your money. If it’s an option between altering payment arrangements or having a debtor default, the company will negotiate. Some of the benefits of credit card consolidation for the consumer include:

  • One payment per month, which the credit consolidation company dispenses to each creditor. Since consolidation programs are customized per consumer, the payment schedule can be arranged to better coincide with monthly cash flow.
  • By achieving one, lower interest rate, more of the money paid actually goes toward resolving the principal on the debt, which reduces the overall balance more quickly.
  • If an account is delinquent, credit consolidation allows it be re-aged. As long as payments are made to the credit company, late fees and interest hikes are avoided.

Most consumers who enroll in a debt consolidation schedule resolve their obligations within 48 to 60 months. Although four years may seem like a long time, look at your credit card statement the next time it’s delivered. By law, companies must now tell consumers how long it will take them to pay off their debt if they make the minimum payment only. Don’t be surprised if you read 15 years and more. Yes, you will have to be disciplined during debt consolidation, but it puts a reasonable end in sight to the debt burden under which you struggle.