Credit cards have become as common as the shirt that you put on everyday; everybody has at least one. In fact, some people feel that they cannot function unless they have a credit card in their wallets.
You can buy what you want to, even if you cannot afford it today. After all, credit cards have made things affordable through its policy of buy-now-pay-later. However, while it feels like you are not spending any money at all, the fact is the you are. Sadly, for most people, reality sets in only when the bills begin to pour in.
It all goes on fine and good until you miss a payment or even make a late payment, which is not entirely impossible owing to the number of credit card payments that people manage at a time. Thus, when you do happen to miss one or make a late payment, you will be charged with late fees, additional charges and your interest rate will see an unprecedented hike.
The very friendly credit card company does not seem to be so friendly now.
People max out one card after another and before long they are deep in credit card debts. The worst case scenario would suggest that you file for bankruptcy. However, if you seriously consider the state of your finances, you can have a better option and that is debt consolidation.
While this option is better than bankruptcy, you should think before you go for it.
Debt consolidation is nothing but combining or merging all your existing debts into a single debt. This way, you will have to make a single payment every month instead of trying to manage several payments during the month.
You can achieve this by taking a low interest loan or transferring your balances to a credit card that offers you a better deal on interest rate and payment options.
You will be able to organize and manage your debts in a better way through this. Besides that, the low interest rate will allow you to save on your payments. This way you will be able to save more every month. You can keep these savings aside to make additional payments towards your consolidated loan.
With only a single payment to make every month, chances are less that you will miss any payment or even be late for any payment. Such regularity in making payments will allow your credit ratings to improve.
If you are a homeowner then you can issue a loan against your home equity. This will work great because the interest rates are low and loan amounts are large. However, if you default on this one then you might lose your home. Hence, think if you can afford this one.
Consolidating your debts will give you financial freedom. However, you will have to make a few changes to your lifestyle in order to stay out of debt.