Usually if you have mounting balances on your credit cards, you would just look to consolidate all your debts onto a 0% APR card. However, if you are in a situation where you have bad debt or a poor credit rating what should you do?
It is near on impossible to obtain 0% Credit Cards For Bad Debt. If you were to secure a credit card in your current financial situation, the likelihood is:-
- You will be offered a much lower credit limit. Often this is not enough to consolidate all your debts.
- You may be asked to pay an additional annual fee. This may not start off as much, but once you start to rack up numerous credit cards, the accumulated annual fees can mount up to a large sum of money.
- If you do manage to get a credit card with a low APR, it will probably be for a short promotional period of 6 - 9 months and then skyrocket to a rate that is ill-affordable. Thus any benefits you gained will soon be lost!
This is where many people turn to a Poor Credit Debt Consolidation Loan instead. You should be able to secure a Debt Consolidation Loan with a fixed rate for a fixed period of time. This will mean that there are no nasty hidden surprises. You don't have to worry about your interest rate suddenly rising and you have an exact payment to budget for every month!
The other reason to obtain a Poor Credit Debt Consolidation Loan over a Bad Credit Credit Card is it is more likely to improve your credit rating. You credit score and rating is affected by how much of your actual credit you have used. So if you have a number of cards all up to their limit, this doesn't look good.
However if you consolidate all your debts into one loan and leave the credit card accounts open, this will be much better for your credit score. It will appear that you have a number of cards that have their full limit available and just one loan to which you have to make monthly payments. I would suggest, even though the accounts remain open, you should cut up the cards though. You don't want to be tempted again.
So for me a Poor Credit Debt Consolidation Loan wins every time!