Unsecured Credit Card Debt Consolidation

This information on unsecured credit card debt consolidation will help you determine whether combining your card balances is a sensible choice, based on your individual circumstances.

unsecured credit card debt consolidation

As you consider your various options for credit card debt relief and whether debt consolidation is a viable strategy for you, let's first review the difference between secured and unsecured debt.

Secured vs. Unsecured Debt

If debt from a loan is tied to tangible property, such as your car or home, it is called "secured" debt. That means the loan is protected or "secured" by that property. The property is also referred to as collateral.

So, in the event that you don't make payments on time or at all, ownership of the property is transferred over to the financial institution that lent you the money.

Said another way, the property the lender takes from you covers the value of the money you were loaned and committed to repay. Since you defaulted on your loan, it becomes the lender's property to keep.

Conversely, unsecured debt is not tied to any type of tangible collateral. Credit card debts are unsecured. Credit card companies are not protected if, for whatever reason, you don't pay the amount you owe. When you are in default, they are left "holding the bag" for the expenses you charged and did not repay.

Considerations and Tips

If you are wondering whether unsecured credit card debt consolidation is a good choice for you, here are few pointers that can help you decide.

Do you have ongoing balances on three or more credit cards

If the balances on your credit cards are not too high, and the interest rates are reasonable, then you may want to stay the course and continue to make monthly credit card payments.

Try to pay more than the minimum required on each of your cards. In fact, pay as much as possible each month and especially on the cards that have the higher interest rates.

Yet, if your cards are maxed out and a loan can help lower the overall interest you pay, consolidation may be worth considering.

Do you have high interest rates on all or most of your cards?

If your card interest rates are extremely high, a consolidation loan can help lower your overall interest rate – and even reduce your monthly payments. Of course, it depends on the terms of the loan.

It is important to run the numbers (the lender can help you with this) and compare your total cost of repaying the loan relative to the total amount of the payments you need to make to payoff your balances. 

Is it difficult to keep track of all your credit card payments when they are due at different times each month?

If this is your main concern, and you currently have good interest rates, you may have an alternate option to unsecured credit card debt consolidation. Many credit card companies let you choose the exact due date of the month, according to your convenience, if you just call and make your request.

If this works out in your favor, then you can write all your credit card checks at the same time each month.

So, there may not be a need for consolidating them to make your multiple payments easier to manage.

Moving Forward with Unsecured Credit Debt Consolidation

If you determine that consolidation is the right choice for your situation, here's how to move forward.Contact financial institutions and inquire about getting a debt consolidation loan.

You may want to contact a number of lenders and compare the terms of the loans. Your goal is to qualify for the a loan that is easy to manage at the lowest possible interest rate.

Remember that most consolidation loans are secured loans so you will likely need to put up some type of collateral to protect the lender. Click here for tips on how to qualify for a debt consolidation loan.

  • Hire a debt consolidation company to help you manage your debt, secure a loan and handle other services, as needed. Be aware that you will pay for the services you receive. For more information, click here: debt consolidation company
  • Get a new credit card with a lower interest rate and move all of your balances over to the new card. Then, cut up your existing cards. This will work if your balances are reasonable and their total is within the credit limit of the new card.
  • Please see the articles below for more on unsecured credit card debt consolidation.

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