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Debt Consolidation: Your Last Hope for Credit Card Debt

What would you do if your accumulating credit card debt were about to blow up? Get to know your last hope with debt consolidation.

Some Singaporeans still accrue outstanding debts beyond their capacity to pay. Most of them will try almost everything to keep it hushed. They may have a relative or friend from whom they can borrow some instant cash. But, they would instead find other discrete ways to save their reputation.

It would be embarrassing to have an outstanding debt because you bought the latest Jordan shoes or Mary Kay cosmetics. These are not needs but instead purchased out of whim. We all know credit cards are double-edged swords. You can earn rewards, rebates and miles with diligent use. However, if you lose control, you will be dealing with a debt you can’t settle.

3 Reasons for Outstanding Credit Card Debt

There are certain factors why some Singaporeans find themselves in a desperate situation of ballooning credit card debts.

Lack of Information

Credit cards are charged with compounding interest. Your debt grows exponentially.

Though there is a fixed interest rate, they will charge it based on the maintaining balance. Therefore, if you owe $2,000 and your compounding interest is 10% a month, you have to pay $2,200. Then, if you fail to pay on the due date, your outstanding balance of $2,420 will have a charge of 10% again.

Since the debt is beginning to snowball, your bank starts calling you. The worst part is that you don’t answer it because you are scared. It is absolutely a mistake. So most banks are interested in getting back their money. They will help their borrowers find other options to make payments more manageable.

Consistently Paying the Minimum 

Should you decide to pay just the minimum payment to avoid late payment charges? First, you must remember that the interest rate will continue to be charged on your credit card. All because you haven’t fully paid your balance.

Aside from the growing debt, your credit score will fall. Because you are paying the minimum amount, you can still not settle your debt.

The longer it takes to pay the debt entirely, the more you are charged. For example, you may pay 50% or more than the purchase price you initially charged to the credit card.

Failure to Track Multiple Credit Card Bills

Another reason for your disastrous debt might be your failure to track your multiple credit card bills. It is common for individuals who have two or more cards. Most credit cards have grace periods or the number of days when the interest rates and other charges are not yet applied. But still, you must know your exact due dates.

Due dates and cut off dates are different. They are confusing. If you are not fond of checking your bills regularly, you will likely forget about it.

How Does Debt Consolidation Work?

Debt Consolidation is a refinancing service that you can use to pay off multiple loans. Others call this the personal finance process to deal with high consumer debt. Simply put, it is combining all your unsecured debt, such as credit cards, into one new loan with just one interest rate and only one bill to remember.

debt consolidation

Credit: https://medium.com/@nicolejiang23/things-you-should-know-about-the-debt-consolidation-loan-in-singapore-f84ec1be6b19

Reduces Stress

Having a huge debt is no joke. Many people had sleepless nights thinking about how to settle their debts and keep them a secret. They try to manage by pretending that everything is fine though cash is very limited. Since you are always worried about this problem, it will significantly affect your lifestyle. Worst case, it alters your daily responsibilities in your job and at home. However, once you have taken a debt consolidation, you can have a sigh of relief and feel better instantly.

Offers Lower Interest Rates

Another advantage is to have one interest to worry about. So, for example, instead of paying several credit cards with a 24% interest rate per annum to be paid simultaneously. It is better to pay one loan with a 4% interest rate if you get it from a licensed money lender.

Some banks may charge up to a 10% interest rate. However, a cheaper interest rate is a breath of fresh air as you can save more money to repay in the next month.

Stops Collection Calls

It is time to say goodbye to collection calls.

You will most likely pass your account to a collection agency when you get way behind your payments and ignore your bank’s calls. By then, you will start getting multiple collection calls a day, every day, until you settle your debt. It is embarrassing and annoying if you get these calls at work.

Recovers Credit Score

Since you have paid your debt, your credit score can start recuperating by paying your new loan on time. Repay your loans diligently to take care of the dent your credit card debt has created.

Has Single Monthly Payment

One of the potential reasons you have an outstanding debt is your inability to keep track of your due dates. You can finally solve this problem through consolidation. Now, all you need to remember is one due date to be paid on time and in full.

Where Can You Get a Loan for Debt Consolidation?

Banks

Banks offer Debt Consolidation services. However, since these are reputable establishments, expect strict regulations and more paperwork than other lenders. Also, if you have flunked credit scores, you might get declined, and you have to consider other lenders.

Licensed Money Lenders

Many private money lenders are willing to help borrowers solve their credit card debt problems, yet you must be keen on choosing the right lender. Some lenders can take advantage of your situation and may be loan sharks. Licensed money lenders will help you get back to financial stability and not milk you for every dollar you have.

If you need to get a fast cash loan, get it from Cash Mart. Cash Mart is a legal money lender with more than four decades of lending experience and continuously serves its growing clientele.