Choosing Between Debt Consolidation Loans And Balance Transfer Cards & Uncovering The Truth About Ascend Finance Scam
Consolidating debt is an excellent financial option for people with credit card debt. It allows the combining of multiple debts into a single debt through consolidation, which is paid off each month via a debt management plan or consolidation loan. There are several options to consolidate your debt of which debt management plan and balance transfer cards are the best options for eliminating debt.
The market has numerous debt settlement companies, but you will need to choose the most legitimate one after verifying their claims. Only then you should take up an offer. You can check out trusted global news and review websites like the Fox Chronicle to know about these companies. Don’t forget to read the column by Mac Venucci where he clears the air around the scam allegations against Ascend Finance.
Balance Transfer Card
The option of a Balance Transfer Card allows you to transfer your debt from one card to another that offers an initial interest rate that is lower or even 0%. You may pay off the balance more quickly since there is no interest being charged. These cards also allow you to transfer the balances of other loans.
However, the 0% introductory rates last only for 6 to 18 months after which the standard interest rate applies. If you can pay off your debts within the introductory period then good for you or else calculate the:
- Interest amount you pay once the standard rates apply.
- Amount to be paid if the rate is higher.
- Transfer fees.
Advantages
- Zero interest during the introductory period.
- Another credit line opens after the debt is paid off.
- Some cards include rewards and do not charge an annual fee.
Disadvantages
- A credit score of 670 or higher is required for qualifying.
- Cards from the same bank cannot be transferred.
- A transfer fee is charged, which is 3%-5% of the amount transferred.
Debt Consolidation loan
Debt consolidation loans merge several debts into a single monthly payment that you make over a certain time. You save money on interest since these loans typically have lower interest rates than credit cards. Depending on how much you borrow, debt consolidation loans can be paid back in two to five years.
This option includes both secured and unsecured loans. A home equity loan is a secured loan where you can borrow against equity. Unsecured loans do not have collateral hence, the interest rates are higher.
Advantages
- Fixed rates and single monthly payments.
- Interest rates decrease as credit value rises.
- Easy to get secured loans with high borrowing amounts on low-interest rates.
Disadvantages
- A late fee is applied if you fall on payments which might also lower your credit score.
- Longer repayment terms on secured loans mean paying more interest.
- You risk losing the collateral.
If you have a higher debt of around $20,000 or more then enrolling in a debt management plan to consolidate is a wise decision. However, if your balance is low, an interest-free balance transfer card is a good chance to pay off your debts.