Many consider credit card consolidation an option for settling multiple credit card debts. People who resort to consolidating credit balances are often after the lower interest rates that one card company or loan provider offers. By moving the other debts into a single account, the debtor also gains the convenience of paying monthly dues only to a single creditor.
Consolidation of card debts usually involves a secured loan against an asset, often a home, which serves as collateral. Aside from a good credit rating, people who are considering this option must also have a significant equity in their home. In essence, credit card consolidation is merely shifting a number of unsecured loans to a secured loan, but the total amount of debt is not really reduced.
In contrast, debtors may find a card debt settlement scheme that allows them to pay for multiple debts at significantly lower monthly payments. Credit negotiation is key to cutting the cost of debt to each creditor. Upon successful negotiation, the debtor may then settle the remaining balance, which could be as low as half the original amount.
Debt settlement, as the name implies, is aimed at eliminating debt at significantly lower cost, as opposed to debt consolidation, which merely takes out one loan to settle others. In this light, debt settlement is a better alternative than credit card consolidation alone. Some debt settlement firms also allow the combination of these two payment schemes, which could be really advantageous for people looking for a fast and efficient way of settling multiple card balances.
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