Credit card consolidation has many different options for consumers and small businesses seeking debt relief. Credit card debt can be a major pain in the neck especially if you have several high interest cards and are only making the minimum payments. Here we take a look at one of the options known as debt settlement.
For consumers and small businesses that are struggling to meet their minimum payments there are really only two options available. Debt settlement and bankruptcy. Bankruptcy should always be your last option and it will take the most severe and longest lasting effect on your credit score. Bankruptcy will negatively affect your credit for at least 7 years while many consumers can recover from debt settlement after just 3 years.
A settlement procedure as been linked with credit card consolidation for many reasons. The first being that in both programs you are able to combine all your debts for one payment. With a debt settlement program this payment will be less than the sum of all your minimum payments. This is because settlement programs are designed for consumers and small businesses that are experiencing a significant financial hardship and can not afford to pay their bills. With a credit card consolidation, the payment will be equal to or a little more than all your minimum payments combined.
So the bottom line is that credit card consolidation can be a very good option for consumers and small businesses that can afford the program. You will be making one monthly payment at a lower interest rate thereby saving you thousands of dollars over the years when you consolidate your debt balances. If you can’t afford the program however and don’t want to file bankruptcy then debt settlement is your best option.