The Differences between Debt Reduction and Credit Card Consolidation

Please note it is your responsibility to evaluate the accuracy, completeness and usefulness of any information, opinion or advice contained in the content below.

The Differences between Debt Reduction and Credit Card Consolidation

If you are in a program of debt reduction, self imposed or otherwise, you need to concentrate on figuring out ways to lower your cash outflow and the amount of bills you have to pay. Credit cards will do the exact opposite; they will increase your bills and make it even harder.

Using credit cards to consolidate your debts is not as effective as debt reduction. Credit cards often have high rates of interest, and will often lead you into deeper debts. In fact, credit cards are one of the leading causes that debtors seek out debt consolidation solutions.

Debt reduction means that you are working to decrease your bills, not add or keep the bills in existence by using another source to pay off the debt. Therefore, instead of considering credit cards as a source for debt consolidation, you must find a way to reduce your debts.

Let’s say you owe money for your mortgage, car payments, insurance, utilities, and other bills that add up to $1200 per month. Now, is there a way we can reduce this amount? Absolutely, but can we find a mortgage that will refinance our loan and help us to combine our monthly bills into one payment?

Yes. There are loans available that offer cash back, underpayment, and overpayment plans; as well as loans that will wrap your bills into one, combining the bills and adding them to your monthly installment.

Do not misinterpret this: your utilities are your responsibility, but for the most part, your car payment, mortgage, and any credit cards or other loans will be rolled into one monthly payment. Therefore, if you’re paying out of the $1200 up to $800 per month toward car payments and mortgage, you may find a lender who will reduce this amount to $600 more or less per month.

Furthermore, if you land a loan that offers cash back, you can use this money to payoff your debts.

Finally, utilities can be reserved and grocery bills can be reduced. In addition, insurance coverage can also be reduced. Therefore, debt reduction is wiser than credit card debt consolidation in the long run.

Debt Consolidation Credit Repair - La Jolla Village News

28 Jun 2009 at 2:22am
At Lucid Assessment we have ranked the best Credit Report & Score Services along with top ID Theft and Credit Card Companies available today. We have taken the time to research and test each of the different companies below and our FIVE STAR ranking ...

HOME OWNERS IN RACE TO PAY OFF CHEAP MORTGAGES - Daily Express

3 Jul 2009 at 6:30pm
The credit crunch and subsequent recession have sparked a mortgage repayment boom with Britons scrambling to use spare cash to cut their property debt by record amounts. Home owners reduced their mortgage debt by a record �8.14billion in the first ...

Why Reducing Credit Card Debt Now Is So Important - HULIQ.com

3 Jul 2009 at 5:44am
Credit card debt has become an enormous burden for many Americans. In today?s economic climate, efforts to reduce credit card debt are particularly important to overall financial health for a variety of reasons. Struggling credit card companies are ...

Debt Relief: A Good Solution For Personal Debt - HULIQ.com

29 Jun 2009 at 11:47am
Though media coverage of debt relief programs tends to lump them all together, there?s actually a great difference between the competing debt relief solutions. The debt settlement plan is often compared, for example, to bankruptcy (though without ...

Debt Burden to Fall When Economy Overcomes Shocks - Minister - Wall Street Jo...

3 Jul 2009 at 12:36am
NEW DELHI -- India's federal government said Friday its public debt could reduce once the adverse impact of the global shocks on the Indian economy is overcome and it resumes fiscal consolidation. The federal government's outstanding public debt ...

Tagged:

cards, consolidation, credit, Credit Card, debt, Debt Consolidation, help, loans, money, payment, solutions

Free Newsletter

Sign up for the free Daily newsletter, filled with tips and ideas on avoiding credit card debt, credit history, tips on getting out of credit card debt, and more. Your email address will be kept confidential and won't be shared. Easily unsubscribe at any time.

If you enjoy the free information available on this site, you're sure to enjoy the free newsletter as well:

Share and Enjoy:

August 28 2008 06:42 am | Debt Consolidation

Trackback URI | Comments RSS

No Debt Anymore .org

Advice on credit repair, credit reports and debt solutions