How to consolidate your credit card debt and do it the correct way?

No business owners or individuals want to stay caught up in a debt trap! Often, they make use of credit cards to settle personal and business debt. And when their financial matters go out of hand, they look for the best solution. One of the best ways to manage credit card debt for business is to consolidate it. However, not many business owners and individuals are aware of it.

And this leads most business owners to search for help in Google. Some also visit many financial counselors. Most Americans today incur almost $1 trillion as their business credit card debt.  If you want to repay your business credit card debt soon, you need to consider various factors.

The way forward

One of the best ways to consolidate a business credit card debt is to opt-in for a personal loan. It often gets termed as debt consolidation or a credit card consolidation loan. To know more about this, you can get in touch with NationaldebtRelief.com. Using the personal loan, business owners can consolidate their current credit card debt as an unsecured loan, which they can pay between two and seven years. Usually, the personal loan ranges between $1,000 and $1,00,000 based on the lender. However, here, you need to get aware of three things:

·         Your credit card interest rate might be more than the total of the interest rate on the auto, mortgage, or student loan. Hence, you need a moment to rethink your decision. If you have a credit card debt, the rate of interest on the card at times can be costly than any other kind of consumer debt.

·         The credit card debt is taken to be a different interest debt! It indicates that the rate of interest will change. For instance, when the Federal Reserve increases the interest rate, the rate will go up on the credit card debt. It also indicates that you will have to shell out extra money monthly for repaying the credit card debt. On the other hand, a personal loan acts as a fixed interest loan. It means the business owners pay one fixed amount monthly, irrespective of any change. It is a predictable option.

·         Also, a personal loan comes with easy and flexible repayment conditions. Do you wish to repay the debt amount in the next two to seven years? If yes, then you might as well have a reduced interest rate as compared to the interest rate on the credit card. In such a situation, the personal loan is the best solution, and it helps you to save interest expenses.

Credit card debt consolidation – The way it works

Today, business owners can apply for a loan online easily. It helps to draw a comparison between the lenders as well as the loan interest rates. Today, your interest rates can be as less as 5.74%. Usually, the lenders take the required time to assess the credit and financial profile that comprises the credit income, score for deciding the interest rate. When you get an interest rate that’s less than the credit card debt, you can reap the benefits. You can receive the personal loan within just a few days.

How much do you save with a credit card debt consolidation?

It is one of the pertinent questions that business owners have. Let's explain this with an example. For instance, your credit debt is $10,000, and your rate of interest is 19%. For this, your monthly payment gets fixed at $250. When you have a good credit profile, you might consolidate the credit card debt along with a personal loan that has a 7% interest rate. And if you get into a repayment term of three years, then you might save approximately $4,634 and also pay the previous credit card debt. So, if you can get an interest rate which is less than 19%, you are in a beneficial place.

Most business owners often wonder about the reason for consolidating credit card debt. The essential reasons for opting for it are:

·         It helps to reduce the interest rate

There are a few credit cards with an increased APR of 10% to 25%. It indicates that you might have to pay an increased interest rate as compared to all the other customer debts combined. In specific situations, increased interest charges might pose difficulty to the repayment of the mortgage. However, based on your credit profile, the personal rates will vary. And you can get a reduced interest rate of 5.45% as well.

·         Single payments in a month

The objective of consolidating your business credit card debt is to merge it in one single repayment amount. It means you are free from the multiple creditor calls and reminders. It takes away your stress and enables you to concentrate on your business and other matters. Also, when you focus on a single payment, you can work towards repaying your debt and not miss out on the monthly payments.

·         Simple application process

Applying for a personal loan or a debt consolidation loan is easy. Today, you can get in touch with the banks and financial institutions present online and share your requirements. The lenders will usually assess your credit profile as well as the financial records. Your credit score is essential for getting the loan. Once you submit all the documents in time, you can expect the loan to get sanctioned within a few days.

Make sure you implement the process of debt consolidation correctly

Many business owners decide to opt-in for a credit card debt consolidation process without knowing how to go about it. It is essential to get the process successfully so that you can reap the benefits. The following steps can help if you are unsure about getting the process of debt consolidation right. 

1.      You need to know what you need

Make sure you decide the loan amount you need to apply for! You should add all that you owe, and that will give you the borrowing amount. It is better to ask for an increased amount and keep extra cash at hand. It is always safe that way.

2.      Determine the repayment time

You need to decide on the repayment time. For instance, there is a particular financial institution and banks that provide a repayment cycle of 36 to 84 months. The term loan depends on the amount you want to shell out monthly for the repayment.

3.      Check the fees

There are a few debt consolidation loan service providers that offer origination expenses for the ones taking a loan. It is important to charge for governing the loan. Also, it can result in as much as 5% of the overall loan amount. You might have to pay prepayment charges that you must consider before you opt-in for a debt consolidation loan. If you don't want to spend any prepayment fees, choose a service provider that doesn't levy that cost.

4.      Assess your rate

Though this step is not obligatory, it is essential to stay aware of it! Do you want to know the interest rate before applying? If yes, then you can use specific tools for the same. It makes sure that your credit score doesn’t get affected. Also, you can know beforehand whether you can get the loan or not.

5.      Take a chance to apply online

Some companies can help you to procure your debt consolidation loan online. The application process is fast, and it gets completed within a few minutes. The loan amount also gets sanctioned and credited within a short period, once the verification and documentation process gets over.

The majority of financial institutions and banks offering the loan with need you to share your social security number, name, and address. You might have to answer a few questions concerning your monthly income as well as housing debt. The process is easy and is not complicated.

6.      Consolidate the debt

Once the approval process gets over, the debt consolidation process starts. Generally, the business person doesn't need to fret about paying all the mortgages themselves. The lender will pay the same, and you can begin by clearing the monthly payments. The funds get sent to the multiple creditors once the loan amount gets accepted.

7.      Don’t miss out on the monthly payments

It is the most crucial step! Hereon you need to repay the loan amount in small fractions every month. This process to gets customized to cater to the business owner's ease and paying capacity. The objective is to ensure that the business owner doesn't miss out on the monthly payments. Missing out on the monthly payments might add-on a fine and delay the debt repayment period.

Business owners can keep track of their repayment progress online, as well. They also get monthly statements that highlight their achievements.

Once you follow all these steps diligently, you automatically get to celebrate one day. Gradually, your debt will get over as you would have completed all the monthly repayments. It is a time to celebrate and rejoice. However, that doesn't mean you will start spending mindlessly and get into another debt. You should know the root cause of your spending and shell out your money accordingly and take a loan when it is required.