Online debt consolidation is when you take multiple debts and combine them into one single debt. This is most often used for credit card debt and will enable you to just make one payment.
The most obvious benefits can be:
- Lower Interest Rates
- Lower Monthly Payment
- Reduction or Cancelling of Fees (late / missed payments)
This is how it works; let's say you have four credit cards. You have a Discover card, Capital One, American Express, and a Best Buy card. Each of these cards has a balance of $1,000, you have gotten behind and are missing payments, paying late fees, making late payments ... Not to mention all the different due dates and increase in interest rates for your accounts.
Before you know it a little bit of credit card debt spun out of control! However you can negotiate with a debt consolidation company and turn your multiple debts into one. The debt consolidation company is going to go out and contact your credit issuers and inform them of the situation.
Next all your accounts will be rolled into one. The phone calls and letter will stop and you will not have to communicate with the credit card companies directly again! Instead you will make one payment to the consolidation company and they will pay your lenders.
It's ok if you have gotten over you head. There are so many reasons why these things happen - it's life!
Don't be embarassed about it, especially because you are taking action. Further if you use a consolidation firm you can save doing severe damage to your credit report and a much larger headache trying to fix that one!
You can qualify for these loans with good credit and a less than perfect rating. This will influence the interest rate you get charged.