Should You Use A Debt Consolidation Loan or A Debt Counseling Service?

When it comes to debt consolidation, you have two choices–A debt consolidation loan or the use of a consumer credit counseling service which also consolidates your debts. Credit counseling is not a loan it is more of a reorganization of your debts through a debt management company. The biggest determining factor in which of these debt options you choose depends on your current debt situation and your discipline. Let�s look at some of the benefits and disadvantages of both consolidating your debt with a loan and consolidating your debt with a credit counseling service.

Here are the pros and cons of both types of debt consolidation.Benefits of both a debt consolidation and debt counseling:
� Decrease in monthly payments One monthly payment
� Debt collection activity reduced or eliminated
� Reduction of interest rates
� Reduction or elimination of fees

Benefits of a consolidation loan:
� No negative affect on your credit rating
� Possible increase in credit rating
� The interest paid on most of these loans is tax deductible

Possible negatives of a consolidation loan:
� Because of the loan being secured with your house, you could lose it if the payments are not made
� Credit score must be high enough to qualify for a loan
� Easy to become overextended (you still have use of your credit cards)
� A consolidation loan is a reorganization of debt, not an elimination of debt

Benefits of a debt counseling agency:
� The agency will help you set up a budget
� The agency will educate you on money management principles

Possible negatives of a debt counseling agency:
� Only unsecured debt is allowed in the program
� You will not be allowed credit card use while enrolled in the program
� You must meet an unsecured debt minimum to qualify for this program
� There may be a negative impact on your credit score

Both consumer credit counseling and debt consolidation loans are excellent options for eliminating your debt. Consider the above listed benefits and draw backs and hopefully they will make it a little clearer which debt solution will work best for you. The most important benefit of getting out of debt is peace of mind. There are few things as stressful as wondering how you are going to pay your bills. The sooner you make a decision the sooner you can begin moving forward towards a life of debt freedom.

Understanding Credit Card Fees

Credit cards can be a big convenience in anyone�s life. It is not necessary to carry cash anymore. You can order over the phone or on the internet just by giving the merchant the number off the card and a few days later your merchandise arrives. Quick and easy, right? It is, but credit cards can also be expensive if they are not managed properly. There are expensive consequences if you do not make your payments on time or if you charge over your credit limit.

If you make late payments or exceed your credit limit, it is going to cost you in the long run. Balance transfer fees can also hit you in the piggy bank. In recent years these fees have skyrocketed and the credit card companies are getting rich as a result of the fees that cardholders are being charged.

Until the mid-1990s, the typical penalty fee was about $10. Last year, the average late fee was $35, according to IndexCreditCards.com, and many companies charged $39. The average credit card over-limit fee was a hair more than $32. So as you can see, charging fees can be very lucrative for the credit issuer and very expensive for the card holder. It is in your best interest to make your payments on time and to stay below your credit limit.

Balance transfer fees can also be expensive. I have seen introductory offers where the fee was waived, but not very often. If you are getting an introductory interest rate that is very low or even 0%, you are probably going to be charged a 3% balance transfer fee. This fee usually tops out at $75, but I have seen some as high as $150. So make sure that before you transfer a balance that the fee will justify the savings in interest. In most cases, the interest you would have paid will exceed the balance transfer fee, as long as you pay the balance off before the introductory rate expires.

You can avoid late fees by setting up a recurring automatic payment on your credit card account. This can be done either through the online bill pay with your bank. It can usually also be done through the credit card company itself. You can choose to make your minimum payment or to pay your balance in full.

The best way to avoid over limit fees is not to go over your limit. However, if you know you are over your limit and the credit card company allowed you to go over your limit (sometimes the charge will be declined if exceeds your limit), make a payment before your statement date. If your balance is below your credit limit on your billing date, you will not usually be charged a fee.

Credit cards are big responsibilities, but with sensible management they can also be a big convenience. It is all in how you use the credit card. Use credit cards to your advantage and do not let the credit card control your life.

Shopping for a Credit Card

Credit Cards�It seems like everybody has one and there are some things that you cannot do without one. You are looking to apply for your first credit card and you are wondering which card is right for you. Keep in mind that managing a credit card is a big responsibility and you if you are not fully aware of how to handle it, there is potential for problems. But with a little bit of knowledge and proper management, credit cards can be a very big convenience.

Here are some tips that will guide you through the credit card selection process:
� How do you spend your money? How do you manage your money? Did you let any of your monthly bills go so that you could get a new outfit or go out with friends for the evening? Do you have a hard time holding on to money? If this sounds like you, a credit card could potentially cause you problems. It may be a temptation and you could soon find yourself with a large balance if you are not careful. It may be best in this case, if you get a credit card that has a lower credit limit.� Why do you need a credit card? For the convenience of not having to carry cash? So that you have a record of your spending? So that you can order items online? If it is for one of these reasons and you plan on paying it off each month, APR will not be an issue for you and you will want to look for a credit card that offers you rewards for charging.
� Which credit card is right for you? If you are purchasing something you are going to pay off over time, you will want to opt for a card that has as low an interest rate as possible. You may even be able to find one that will offer you 0% for a certain amount of time. However, if you are paying the account off monthly, interest rate will be of no concern to you and you will want a credit card that offers another type of benefit for your use.
� Why should you read all that fine print? Read the card member agreement and understand what is being said in all that fine print. You do not want any surprises when you receive your credit card statement. Some things to take note of are fees. There could be annual fees, late fees, over limit fees, application fees, among others. If you have an introductory interest rate, be aware of what actions can void those rates.

Credit cards can be a blessing, but they can also be a curse. It is all in how you manage the credit card. There are many options available on the internet and there are many websites that will actually compare cards and list the benefits and pitfalls of each card. Credit cards can make your life easier if you use them properly.

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