Consolidate Your Credit Card Debt With Or Without A Loan
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- Debt consolidation does not always have to consist on a debt consolidation loan. Some consolidation agencies can achieve good results by negotiating with credit card companies or credit card issuers on your behalf. In any case, the aid of professional debt consolidation agencies is needed in order to get good results and reduce your debt so you can afford payments and avoid bankruptcy.
- Credit Card debt can be consolidated by using a debt consolidation loan. A debt consolidation loan is an excellent solution but is not always available for everyone. However, debt consolidation agencies have a battery of options for reducing credit card debt being debt negotiation their first and most powerful weapon.
- Credit Card Debt Basics
- The problem with credit card debt is that it is easily accumulated. Due to the flexible nature of credit cards and due to the fact that they are literally within the reach of your hands, using them when you lack the cash is very tempting. However, if you lack the discipline necessary to use them you will eventually find yourself unable to pay the minimum monthly payments.
- Moreover, credit card financing is extremely expensive. Probably the only source of finance that charges higher interest rates than credit cards are payday loans and cash advance loans. Thus, debt accumulates easily due to the high interest rates, fees and costs charged for using the credit card to finance purchases.
- Debt Consolidation Loans
- A debt consolidation loan is used to cancel all debt on your credit card balances and spreading it over a long repayment program with low and affordable monthly payments due to a significantly lower interest rate. This is an excellent solution to eliminate credit card debt as long as you do not begin using your credit card again to finance purchases. Otherwise your credit card debt will begin to accumulate once again and you will end up in a worse situation than before
- Debt consolidation loans however, need to be approved and thus, your credit score has to be good enough so you can qualify. You can always resort to a home equity loan which can reduce the credit requirements necessary for getting approved for a consolidation loan. However, if you do not have sufficient equity and your credit score is low, you will have to resort to other means.
- Debt Consolidation Agencies
- A debt consolidation agency will contact your creditors and negotiate with them reductions on your debt. They have expert negotiators that can agree with your creditors: lower interest rates, debt refinancing, waivers, etc. These agencies will also help you make a budget and control your spending giving you tips on how to spend more efficiently and how to get more out of your money.
- They will also offer you different options for debt reduction like using your credit cards to reduce your debt by taking advantage of 0% promotional periods and 0% Balance transfers. You just need to make sure that if they will handle payments on your behalf, they provide you with the corresponding receipts. Do not leave everything up to them, make sure they are actually doing their work as there are many scams out there and you can never know.
- SOURCE[Melissa Kellett, expert loan consultant]
- Posted by Anusheya at 3:23 PM | Labels: Finance | 0 comments
Wednesday, August 5, 2009
Changes in student loans could mean savings for you
What do you get when you combine a rocky job market with soaring student debt? Student-loan defaults, and they're at the highest level since 1998.
This year's graduates are facing hiring freezes, and many of last year's have been laid off or are still struggling to find a well-paying job. Luckily, there's a bit of a silver lining: On July 1, important changes occurred for federal student loans.
Variable interest rates change and any new terms take effect on July 1 each year. But this year, not only are interest rates falling, but also a new repayment option is available.
Here's what you need to know:
Low income can equal low payments. A new repayment option, called Income Based Repayment (IBR), caps your monthly federal student-loan payments based on income and family size. If you make less than one and a half times the federal poverty level for your family size, your payment will be zero. (You can find the poverty guidelines at http://www.hhs.gov.) Anything you make above that is considered discretionary income, and your monthly student-loan payment will be 15 percent of that amount.
To find out your options, contact your lender. The best part is, after 25 years, any remaining balance is forgiven.
Your interest rate may go down. If you have a variable rate Stafford loan -- and you do if you took the loan out before July 1, 2006 -- your interest rate resets each year on July 1, as long as you haven't consolidated. This year, the interest rate is falling nearly two percentage points, to 2.48 percent. If you consolidate now, that change can save you thousands over the life of the loan, depending on your balance. Graduates in the Class of 2009 have an even better deal, says Edie Irons, communications director of the Project on Student Debt. "If you consolidate during your grace period, which is the six months after you graduate, you can lock in a rate of 1.88 percent."
New borrowers of subsidized (need-based) Stafford loans are also going to see lower rates. Because of the College Cost Reduction and Access Act of 2007, the interest rate on these loans for 2009-2010 is going to be 5.6 percent, compared with 2008-2009's rate of 6 percent. Even better, rates on these loans are going to continue to fall until they hit 3.4 percent in 2011.
Pell Grants are worth more. "The American Recovery and Reinvestment Act of 2009 increased the Pell Grant to $5,350 for 2009-2010," says Mark Kantrowitz, publisher of http://www.finaid.org. Pell Grants are awarded based on need, and they don't need to be repaid. To find out if you're eligible, you have to fill out the Free Application for Federal Student Aid, available at http://www.fafsa.ed.gov.
Take advantage of other perks. If you work full time in a public-service job, your Federal Direct Stafford loans, Federal Direct PLUS loans and Federal Direct Consolidation loans will be forgiven after 10 years. The range of public-service jobs is large and includes government jobs, public health, education, many social-work positions, public defenders, public librarians, law enforcement and firefighters, and employees of 501(c)(3) organizations.
SOURCE[Jean Chatzky is an editor-at-large at Money magazine and serves as AOL's official Money Coach]
This year's graduates are facing hiring freezes, and many of last year's have been laid off or are still struggling to find a well-paying job. Luckily, there's a bit of a silver lining: On July 1, important changes occurred for federal student loans.
Variable interest rates change and any new terms take effect on July 1 each year. But this year, not only are interest rates falling, but also a new repayment option is available.
Here's what you need to know:
Low income can equal low payments. A new repayment option, called Income Based Repayment (IBR), caps your monthly federal student-loan payments based on income and family size. If you make less than one and a half times the federal poverty level for your family size, your payment will be zero. (You can find the poverty guidelines at http://www.hhs.gov.) Anything you make above that is considered discretionary income, and your monthly student-loan payment will be 15 percent of that amount.
To find out your options, contact your lender. The best part is, after 25 years, any remaining balance is forgiven.
Your interest rate may go down. If you have a variable rate Stafford loan -- and you do if you took the loan out before July 1, 2006 -- your interest rate resets each year on July 1, as long as you haven't consolidated. This year, the interest rate is falling nearly two percentage points, to 2.48 percent. If you consolidate now, that change can save you thousands over the life of the loan, depending on your balance. Graduates in the Class of 2009 have an even better deal, says Edie Irons, communications director of the Project on Student Debt. "If you consolidate during your grace period, which is the six months after you graduate, you can lock in a rate of 1.88 percent."
New borrowers of subsidized (need-based) Stafford loans are also going to see lower rates. Because of the College Cost Reduction and Access Act of 2007, the interest rate on these loans for 2009-2010 is going to be 5.6 percent, compared with 2008-2009's rate of 6 percent. Even better, rates on these loans are going to continue to fall until they hit 3.4 percent in 2011.
Pell Grants are worth more. "The American Recovery and Reinvestment Act of 2009 increased the Pell Grant to $5,350 for 2009-2010," says Mark Kantrowitz, publisher of http://www.finaid.org. Pell Grants are awarded based on need, and they don't need to be repaid. To find out if you're eligible, you have to fill out the Free Application for Federal Student Aid, available at http://www.fafsa.ed.gov.
Take advantage of other perks. If you work full time in a public-service job, your Federal Direct Stafford loans, Federal Direct PLUS loans and Federal Direct Consolidation loans will be forgiven after 10 years. The range of public-service jobs is large and includes government jobs, public health, education, many social-work positions, public defenders, public librarians, law enforcement and firefighters, and employees of 501(c)(3) organizations.
SOURCE[Jean Chatzky is an editor-at-large at Money magazine and serves as AOL's official Money Coach]
Wednesday, August 5, 2009
GETTING PERSONAL: Student Loan Consolidation Good Option
This could be the right time to consolidate student loans.
A number of programs and interest rates change after July 1, offering a chance to lower costs and get better repayment options. That's good news for students, who are graduating with on average about $23,000 in debt, and of course for parents still supporting them.
Similar to refinancing, consolidating of student's federal loans can be done for no fee. It's also a good opportunity for advisers to discuss college costs with families. The financial crisis and tighter credit have left even high networth investors less confident about college savings.
If someone consolidates during the grace period - which is typically six months after graduation - the Stafford loan rate could drop to 1.88% from 3.61%. Someone already repaying loans could see the rate drop to 2.4% from 4.21%. The PLUS loans rate could drop from 5.01% to 3.28%, says Mark Kantrowitz, publisher of FinAid, a Website that tracks the college financial aid industry. Consolidation, he says, locks in the lower rates beyond the coming year.
"These rates are historically low rates, and we are unlikely to ever see rates this low again," he says.
Until July 2006, interest rates on federal students were at variable rates that could potentially climb to 8.25% for Stafford Loans and 9% for Plus Loans. The consolidated interest rate is a weighted average of the interest rates on the loans at the time of consolidation, rounded up to the nearest one-eighth of a percentage point. It cannot exceed 8.25%.
After 2006, the rates became fixed. The unsubsidized Stafford loans are now 6.8%. The subsidized Stafford loan is decreasing each year from 6.8% to 3.4%. (It is scheduled to return to the 6.8% rate if Congress does not act). The Plus Loans are now fixed rates at 8.5% for FFEL PLUS Loans or 7.9% for Direct PLUS Loans.
Another benefit to consolidation is that it is a requirement for some deferred repayment plans. Borrowers typically have from 10 to 25 years to repay loans, depending on the repayment plans they choose.
Extending payments may ease monthly expenses in the short term, but it could add significantly to the cost of the loan.
For example, repaying $230 a month at the Stafford rate of 6.8% will add $7,619 in interest to a $20,000 loan repaid over 10 years, says Kantrowitz. In contrast, extending that to 20 years with payments of $153 a month would add $16,640 to the $20,000 loan for $36,640.
Another option for grads after July 1, is a new income-based repayment plan. The program doesn't require consolidation, but it caps monthly payments at a certain percentage of the borrower's income.
"It's actually a very good plan for people experiencing financial difficulties," says Kantrowitz. "It's better for you than a forbearance."
Only a few companies still consolidate private loans. That's worth considering if the borrower's credit score has significantly improved - say more than 100 points - and may enable them to get a better interest rate.
Another potential benefit to consolidating a private loan is that it could enable someone to remove a co-signer such as a parent or relative from potential liability. This typically requires regular payments of 24 to 48 months.
(Jilian Mincer is a Getting Personal columnist who writes about personal finance; she covers topics including pensions, insurance, and college and retirement savings. She can be reached at
212-416-2239
or by e-mail at jilian.mincer@dowjones.com.)
A number of programs and interest rates change after July 1, offering a chance to lower costs and get better repayment options. That's good news for students, who are graduating with on average about $23,000 in debt, and of course for parents still supporting them.
Similar to refinancing, consolidating of student's federal loans can be done for no fee. It's also a good opportunity for advisers to discuss college costs with families. The financial crisis and tighter credit have left even high networth investors less confident about college savings.
If someone consolidates during the grace period - which is typically six months after graduation - the Stafford loan rate could drop to 1.88% from 3.61%. Someone already repaying loans could see the rate drop to 2.4% from 4.21%. The PLUS loans rate could drop from 5.01% to 3.28%, says Mark Kantrowitz, publisher of FinAid, a Website that tracks the college financial aid industry. Consolidation, he says, locks in the lower rates beyond the coming year.
"These rates are historically low rates, and we are unlikely to ever see rates this low again," he says.
Until July 2006, interest rates on federal students were at variable rates that could potentially climb to 8.25% for Stafford Loans and 9% for Plus Loans. The consolidated interest rate is a weighted average of the interest rates on the loans at the time of consolidation, rounded up to the nearest one-eighth of a percentage point. It cannot exceed 8.25%.
After 2006, the rates became fixed. The unsubsidized Stafford loans are now 6.8%. The subsidized Stafford loan is decreasing each year from 6.8% to 3.4%. (It is scheduled to return to the 6.8% rate if Congress does not act). The Plus Loans are now fixed rates at 8.5% for FFEL PLUS Loans or 7.9% for Direct PLUS Loans.
Another benefit to consolidation is that it is a requirement for some deferred repayment plans. Borrowers typically have from 10 to 25 years to repay loans, depending on the repayment plans they choose.
Extending payments may ease monthly expenses in the short term, but it could add significantly to the cost of the loan.
For example, repaying $230 a month at the Stafford rate of 6.8% will add $7,619 in interest to a $20,000 loan repaid over 10 years, says Kantrowitz. In contrast, extending that to 20 years with payments of $153 a month would add $16,640 to the $20,000 loan for $36,640.
Another option for grads after July 1, is a new income-based repayment plan. The program doesn't require consolidation, but it caps monthly payments at a certain percentage of the borrower's income.
"It's actually a very good plan for people experiencing financial difficulties," says Kantrowitz. "It's better for you than a forbearance."
Only a few companies still consolidate private loans. That's worth considering if the borrower's credit score has significantly improved - say more than 100 points - and may enable them to get a better interest rate.
Another potential benefit to consolidating a private loan is that it could enable someone to remove a co-signer such as a parent or relative from potential liability. This typically requires regular payments of 24 to 48 months.
(Jilian Mincer is a Getting Personal columnist who writes about personal finance; she covers topics including pensions, insurance, and college and retirement savings. She can be reached at
212-416-2239 or by e-mail at jilian.mincer@dowjones.com.) Wednesday, August 5, 2009
The 4 Benefits Of Student Loan Consolidation
If you haven’t noticed it, education costs don’t come cheap nowadays. Many students are taking loans to support their way through college. It seems to settle their problem for the time being but things will start to get difficult when they graduate. They are already in debt before they even earn their first dollar. The tips below are to show you why you should consider the student loan consolidation.
1. Lower payment
This is by far the best reason for you to consider taking the loan consolidation. It is possible to reduce your monthly payment by 40% - 50% when you make a research on the lenders. Imagine freeing half of the financial load being lifted off your shoulders. You will feel that the air is lighter and your life is not just about paying for loans.
2. Lower rates
Besides lowering your payment, you can also lower your interest rates by looking for the right lenders. Again, it will prove beneficial to you when you run some researches on the various lenders’ offers.
And be careful for the fine prints and remember to ask for any hidden cost. You don’t want to suffer any extra payment when you are trying to manage your loan. And to help you on that, you can look for online consolidators to calculate your future student consolidation loan base on the current rate of your student loan.
3. Only one payment
Let’s say you have acquired a housing loan and other possible loans during your studies. And imagine you have to bank in different payments to different companies at different time. Isn’t that a lot of works to do? Wouldn’t it be great that you can make one payment and be free from all the annoying reminders? You can do that when you consolidate the student loan and get your loans taken care of.
4. Relieve stress
Please know that the financial companies will punish you for paying late and surely you don’t want that. It is a stressful job to remember the various due dates for the payments. What if you have more important tasks to attend to?
It is very possible that you will forget to pay the loan. And when you sign up for student loan consolidation, you only pay once to the company to cover all your loans. This frees your mind so that you can focus on your job or something more rewarding.
1. Lower payment
This is by far the best reason for you to consider taking the loan consolidation. It is possible to reduce your monthly payment by 40% - 50% when you make a research on the lenders. Imagine freeing half of the financial load being lifted off your shoulders. You will feel that the air is lighter and your life is not just about paying for loans.
2. Lower rates
Besides lowering your payment, you can also lower your interest rates by looking for the right lenders. Again, it will prove beneficial to you when you run some researches on the various lenders’ offers.
And be careful for the fine prints and remember to ask for any hidden cost. You don’t want to suffer any extra payment when you are trying to manage your loan. And to help you on that, you can look for online consolidators to calculate your future student consolidation loan base on the current rate of your student loan.
3. Only one payment
Let’s say you have acquired a housing loan and other possible loans during your studies. And imagine you have to bank in different payments to different companies at different time. Isn’t that a lot of works to do? Wouldn’t it be great that you can make one payment and be free from all the annoying reminders? You can do that when you consolidate the student loan and get your loans taken care of.
4. Relieve stress
Please know that the financial companies will punish you for paying late and surely you don’t want that. It is a stressful job to remember the various due dates for the payments. What if you have more important tasks to attend to?
It is very possible that you will forget to pay the loan. And when you sign up for student loan consolidation, you only pay once to the company to cover all your loans. This frees your mind so that you can focus on your job or something more rewarding.
