Can I Use My Credit Card After Debt Consolidation?


Credit Cards

It is hard to imagine life without loans. It is like imagining life without air. How do people survive? If loans weren’t accessible, many people would have gone bankrupt. Some of the wealthy moguls of today would have been casual workers at M.C. Donald or some grocery store. At the same time, individuals who cannot afford to buy a house outrightly would have taken refuge on the streets. Loans are a blessing to humanity. However, paying them is sometimes challenging. If you find it hard to settle a credit card loan, you should consider debt consolidation. But after doing so, should you still use your credit card?

It is advised that you freeze or destroy your credit card after debt consolidation however, you can still use it. Putting your credit card aside or destroying it will ensure that you don’t overspend and accumulate more debt.

Several Americans are struggling with different types of debts. And while some of these individuals have given up on repaying what they owe, probably due to their dire financial situation, others have decided to reach out to the best debt consolidators to settle their debt. Debt consolidation is a financial strategy that makes it easier to settle high-interest credit card debt by cutting down the interest rate and reducing monthly payments on your debt. While adopting this technique, it is essential that you reduce your spending to the barest minimum. How do I mean? Read on to find out.

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Can I Use My Credit Card After Debt Consolidation?

Gone are the days when there were debts that were extremely difficult to settle. This doesn’t mean settling debt is a walk in the park. It simply means that today, the introduction of some debt relief technique has made it somewhat easier to settle debts, provided you know what to do.

Some of these techniques, including forbearance, refinancing, debt settlement, and the likes, have helped several Americans eliminate their debt without much difficulty. Each of these debt relief techniques is effective in settling some types of debts. For instance, if you are struggling to pay a credit card debt, the best way forward is to consolidate it.

If you are a newbie, who is just hearing of debt consolidation for the first time, I understand that you may have some questions like, “How do I consolidate my debt?’ As we progress in this article, I’ll try my best to bring you up to speed.

What Is Debt Consolidation?

Debt consolidation is a repayment technique that combines multiple debts (high-interest debts like credit card bills) into a single payment. This debt repayment technique might be effective for you if you can get a lower interest rate. That will help cut down your overall debt and reorganize it so you can eliminate it faster without much difficulty.

If you are struggling to pay a small-sized debt and you wish to reorganize multiple bills with diverse interest rates, payments, and due dates, debt consolidation is your best bet! However, before you jump in, you should talk to a financial adviser who can recommend the best way to consolidate loans.

How Does Debt Consolidation Work?

Debt consolidation works in a simple way. This debt repayment technique allows you to cut down the stress of dealing with multiple debts and due dates by getting a reduced, fixed-interest rate loan. With this loan, you can pay off the debts so that you only have to make one monthly payment for the duration of the loan. By so doing, the debt gets paid faster and without much stress.

When considering merging your debts, the concept is to pay less interest and/ or get out of high-interest debt faster than if you decide to stick with paying multiple lenders. However, with several debts on your list (mortgage, student loans, medical bills, and credit cards), which should you tackle first?

It would be best if you tackled the most expensive debt (high-interest rate), then consider the loans with interest rates that can rise.

Is Debt Consolidation a Good Idea?

Many people ask me, “is debt consolidation a good idea? And my answer is always the same. This debt repayment technique is good only if you can obtain a loan with a lower interest rate. Is it possible to get 0 interest debt consolidation loan? I doubt that. However, you can get something between 7% and 24%, which is ok if you are struggling with multiple debts with an accumulated interest rate of 45%.

Combining your debt and taking out a loan to settle it can be tricky. To increase your rate of success, ensure you deal with the best debt consolidators. And ensure that you review your spending and create a budget to ensure that you don’t accrue more debt. You can also consider contacting your creditors to see if they can lessen your payment.

As I mentioned earlier, after merging your debt, it is essential that you cut down your spending. What does it mean? Should you still use your credit card?

After combining your debt, ensure you don’t use your credit card, so you don’t accumulate extra debt. If possible, destroy it. Or you can keep it but only use it for emergencies. Overspending on your credit card while tackling your debts could plunge you deeper into debt. So to avoid this, freeze the card but don’t cancel it, as doing so could hurt your credit score.

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Is Consolidating a Credit Card Bad For Your Credit?

As mentioned earlier, there are a few debt-relief methods that are effective in helping individuals pay their debt or reduce the stress associated with trimming down or paying off these debts. However, before you consider any of these methods, it is essential you first consider the harm it’ll have on your credit score. For instance, if you consider credit card loan consolidation, it makes sense to find out if it can hurt your credit score.

Consolidating your credit card debt can hurt or improve your credit. It depends on the method you adopt and how diligent you are in sticking to the plan.

In a nutshell, consolidating your debt can help you cut down your monthly payment and help enhance your credit, provided you stick to an excellent plan to settle your debt. However, if you do otherwise, the reverse may be the case.

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