Low-Interest Debt Consolidation

By: Milos Pesic

The interest rate that you are paying on your credit cards is...there isn't another word for it...outrageous! Credit card interest rates are ALWAYS far above the prime interest rate and much, much higher than the interest rates that you would be charged by banks, credit unions, and mortgage companies.

That "minimum" payment that you make each month usually only covers the interest that has been added to the total that you owe for that month. If you only make the minimum payment, you will not be paying down the principal. You are just paying the credit card company so that you can owe them money, and you are paying too much interest...WAY too much interest.

In general, I am opposed to interest except when I am collecting it, and that is the way that you need to see interest as well. The interest that you pay is not BUYING you anything. You aren't getting to take a vacation or go out for dinner. You are just GIVING that interest to the credit card company because they sent you a piece of plastic and told you to have a good time.

A debt consolidation loan is made through a bank or a mortgage company. The interest will likely be stopped from accumulating on your credit card debt, and when you get a lower-interest debt consolidation loan, a lot more of that payment that you make each month will be going toward eliminating the debt. Not all of it will be going toward eliminating the debt, but a lot MORE of it will. You will be paying a lower rate of interest, and the difference is huge.

Most credit card companies allow for "variable" interest rates and you agreed to that when you signed on the dotted line. That means that the interest that you are charged can go up as interest rates are raised. A debt consolidation loan is made at a "fixed" interest rate, and that rate will not change for the duration of the loan.

Author Information:

Milos Pesic is a professional Debt Management consultant who runs a highly popular and comprehensive Debt Consolidation web site. For more articles and resources on debt management, debt consolidation programs, free debt counseling and much more visit his site at: http://debtpaid.info/