Virginia Debt Consolidation for Credit Cards
If you are in over your head with credit card debt, you’re not alone. In fact, if you live in Virginia, you are in especially good company. According to BankRate, Virginians carry the sixth-highest level of credit card debt in the nation. As of July 2012, the average amount of personal credit card debt per person totaled $7,848, which is significantly higher than the national average of $6,304. Although the economy has improved since the recession, unemployment rates are low and people continue to struggle with overwhelming credit card debt—so many turn to debt consolidation for help. Is Virginia debt consolidation right for you? Read on to find out.
Overwhelmed by Credit Card Debt?
Like most people, you probably had good intentions when you opened the credit cards that you have. Unfortunately, things don’t always go like we plan in life; jobs are lost, relationships end, and unforeseen circumstances can occur. If you are at the point where you can only afford to make the minimum payments on your cards, or perhaps can’t even do that, it’s time to address the situation before it spirals even further out of control. By considering debt consolidation, you may be able to avoid the serious credit problems that can ensue due to excessive credit card debt.
Why Debt Consolidation?
As the term implies, debt consolidation involves taking debt from multiple creditors and consolidating it into a single balance. One of the best reasons to do so is for simplicity; rather than juggling several credit card payments, which can easily result in missed or late payments, you just have one debt to deal with. Another is savings. When done correctly, debt consolidation may help you to reduce interest charges, avoid late payment fees and other charges, and pay off debt more quickly, which also saves you money.
Step One: Check Your Credit Report
Before weighing the various debt consolidation options, it is important to have a clear understanding of the current state of your credit. Obtain copies of your credit report from all three bureaus—Experian, TransUnion and Equifax—and remember that you are entitled to one free copy of each per year by federal law. Make a list of all of your outstanding credit card balances, and keep your eyes peeled for errors. If you come across any, dispute them before beginning the debt consolidation process, or they could cause problems for you down the road.
Step Two: Weigh the Options
There are several options out there when it comes to consolidating credit card debt. The most effective and popular include:
Consolidation credit cards
This option only makes sense if you have strong credit. Unfortunately, many people with major credit card debt have credit issues that preclude them from trying it. However, if your credit is good, there are credit cards that are specifically designed for debt consolidation. Known as balance transfer credit cards, they typically offer competitive interest rates and other perks. For this option to work, you’re going to want the new card to have a lower interest rate that the others. Beware of low introductory APRs because balances must typically be paid in full before the introductory period ends, or you may end up with high interest charges after all.
Again, this option is only viable if you have excellent credit. Unlike credit cards, personal loans charge simple interest rather than variable rates, so they tend to be easier to manage. These are typically offered by banks and credit unions, but there are companies out there that offer debt consolidation loans. Before considering one, confirm that it is registered to do business in Virginia by checking with the state attorney general or with the Virginia Bureau of Financial Institutions.
Debt counseling or management
You don’t usually need good credit to qualify for debt counseling, or debt management, which involves establishing a plan with a debt counseling agency and making one monthly payment to them. The agency then disperses payments to your creditors. Many times, creditors lower interest rates for people who are actively participating in debt management plans, so you stand to save money this way too.
Take the First Step Today for Virginia Debt Counseling
Although debt consolidation can be an effective way to get a handle on out-of-control credit card debt, it’s not a cure-all. Some of the methods that are mentioned above can backfire if not handled properly. For instance, if you fail to pay off your balance on a low-interest-rate consolidation credit card before the introductory period expires, interest rates will raise and you will lose money. If you max out that card, your credit may be negatively impacted because it will affect your credit utilization percentage. When it comes to Virginia debt consolidation, debt counseling is often the best and most effective option. Reach out to Christian Debt Counselors today to weigh your options and to learn more.