Source: ezinearticles.com
Anyone looking to find an answer for their mounting debt has probably at least heard of credit card debt consolidation loans. The term is actually often misused when referring to credit card debt consolidation. It is important that people properly understand exactly what their options are so we're, debt consolidation loan, going to take a look at those right now.
Simply stated, debt consolidation is when a consumer combines all their debts so that there is one single monthly payment which will then be distributed to satisfy the various creditors. The whole purpose of it is to make the payments, debt consolidation loan, more affordable, debt, debt consolidation loan, consolidation loan, by lowering the interest rates. Oftentimes penalties and fees are also forgiven by the creditor.
So when people speak of credit card debt consolidation loans they are actually not speaking about a loan at all but rather a program designed to make their payments more affordable so that they can get them paid off and become debt free. If consumers are in fact seeking a loan to pay off their credit card debt then perhaps a home equity loan or some other line of credit such as a personal loan is a possibility.
If the consumer is in fact looking for a loan to completely pay off their debt then it is actually not a consolidation loan at all. What the consumer is doing is not consolidating their debt but rather using the loan to pay it off. The distinction between the two is where the confusion usually begins for some people.
Debt consolidation companies and credit counseling services are terms that are, debt consolidation loan, often used to describe the very same things and that is companies that negotiate on behalf of consumers in debt. So instead of securing credit card debt consolidation loans they are actually negotiating lower interest rates so that the debt is more affordable.
These debt consolidation services are able to do that because they have pre-existing relationships with financial institutions and they understand the way that they operate. The card companies are willing, debt consolidation loan, to accept payments with lower interest rates because they understand that the consumer that owes the money can no longer afford it and is close to defaulting on their payments, in which case, the credit card company would get nothing.
Usually this process takes 4 to 5 years before credit card debt is completely paid off. During that time not only will the individual not be able to use their cards, but the accounts will actually be closed. And while these are not credit card debt consolidation loans as previously believed, it is still very important to thoroughly, debt consolidation loan, check out the company you're interested in doing business with to make sure that they are indeed reputable.
Learn how credit card debt consolidation loans can help you get out of debt when you visit http://www.debtconsolidationhelpquote.com.
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