Debt can get out of control rather quickly. Perhaps it’s from medical bills, shopping sprees or unexpected emergencies. No matter how it happened, learning to get a handle on it can feel overwhelming. But you can do it, one step at a time. Understanding the differences between types of debt can help you navigate the first steps to take.
Revolving debt gives you a way to make routine purchases within a capped spending limit on a credit card. It requires a payment each month, and you can pay it off entirely or partially.
Installment debt lets you commit to a long-term expenditure for a house, car or major event like a college education, and you must pay a fixed amount monthly according to terms.
Revolving debt and installment debt require you to make the minimum payment each month. When you miss a payment, your lender will report it to the credit card bureau.
Understanding the Consequences of Debt
Missed payments can wreck your FICO score and create high interest rates on your credit cards among many other adverse side effects. They can make it hard to rent an apartment, get a loan or qualify for certain types of jobs. Cellphone companies may not accept your application. Your insurance premiums may surprise you when you have a low credit rating. Debt consolidation can get you out of a financial hole and help you get back on your feet again when you get in too deep with revolving debt and installment debt.
Counting the Advantages of Installment Debt
The appeal of borrowing to buy something you want can lure you into a land of indebtedness. When you get the money in a lump sum to make a large purchase, the temptation to forget about it once you get what you want can create financial problems. The advantages of an installment loan include features that make them very attractive.
- Interest Rates – Installment loans usually include low, fixed interest rates and contain no surprises.
- Repayment – The set amount of the payment lets you plan your budget and expenditures so that you have the funds to meet your loan obligation.
- Credit Reputation – You can enjoy the feeling of self-confidence of applying for a credit card when you put your financial affairs in order
- Relationship with Finance Professionals – You can take pride in qualifying for an installment loan and the respect of a lender who approves it for you.
Recognizing the Disadvantages of Installment Loans
The downsides of installment loans usually require you to complete a lot of paperwork. However, this allows the lender to know your financial history. The process may take a long time for approval to come through, and it often requires a healthy credit score. Until you can establish a relationship with a lender, you may have to put up some collateral.
Evaluating the Pros and Cons of Revolving Credit
The convenience of a credit card that you can use to buy what you want provides a great appeal that can lead to financial problems as well. While each card that you use has a capped spending limit, you can spend up to that point. The temptation to spend as much as your limit allows creates a potential disadvantage of revolving credit. The reality of a credit card in your pocket may lead you to spend more than you can afford.
Finding a Way Out of Debt
Indebtedness can make you feel powerless and unsure of your next step. You know for sure that doing nothing only makes your problems worse but digging out of overwhelming debt presents difficult challenges. While you can try to pay off your biggest debt first or the highest interest rate credit card, we offer an alternative that can give you relief sooner. You may consider bankruptcy, but we can help you avoid a decision that you may regret later. Debt consolidation gives you the best way to get out from under the financial problems that you face.
Paying Off Financial Obligations with Debt Settlements
At Christian Debt Counselors, we offer to assist you on your journey to become debt free. Our knowledgeable debt counselors will work alongside you to find the best solutions for you. Its our mission to help you gain financial freedom.
Our years of successful experience help us negotiate with your credit card company or collection agency to get a better deal for you. We can help you navigate the trouble that indebtedness creates and get a fresh start.
When you think that you have run out of options, you can schedule an appointment with us here at Christian Debt Counselors. You may find that the same creditors who refuse to discuss anything with you can change their mind when they talk to us. We have solutions for you that will help you meet your goals. We want to help give you the peace of mind that can let you enjoy your life again. Let us put our experience, reputation and negotiating skills to work for you.