- 1 Mahomes Capital Reviews and Complaints
- 1.1 Consolidating Credit Card Debt
- 1.2 Is Debt Consolidation Always a Good Idea?
- 1.3 Credit Card Debt Consolidation: Getting Started
- 1.4 How Does Your Credit Score Affect Debt Consolidation?
- 1.5 How to Consolidate Credit Card Debt With Loans
- 1.6 Can Debt Consolidation Affect Your Credit Score?
- 1.7 How About a Debt Relief Agency?
- 1.8 Consolidation Is Useless Without a Plan
Mahomes Capital Reviews and Complaints
Mahomes Capital understands that life happens, and sometimes, debt is inevitable. You can avoid high daily compounding interest and save money for your future and family with a Mahomes Capital debt consolidation loan for your unsecured debt.
Based on Mahomes Capital customer reviews, this one easy step, you can take control of your finances and save thousands over the course of your loan. That’s money that goes into your pockets – not to your lenders or credit card companies.
Consolidating Credit Card Debt
Even if you can manage to graduate without incurring any student loan debt, chances are you’ll hold a credit card.
If that debt starts spiraling out of control, it can be tough to make payments on time and in full.
The quickest route to financial and emotional freedom is to pay down your balances.
When you have multiple balances spread across several cards, though, it can be challenging to stay afloat.
What can you do, then, to better manage credit card debt, and to pay it off for good?
You can get debt under control, but you’ll need to formulate the right strategy first.
Debt consolidation can be a catalyst for this process. With this approach, you’ll roll multiple debt balances into a single monthly payment.
You would take out a new line of credit or a new loan, and then use this to pay off your debts. You then focus on managing and repaying a single balance.
Not only will you no longer need to juggle creditors, but you’ll also find you might even get more favorable terms. This is where the real benefit of debt consolidation will be felt. You’ll make your monthly payment more manageable, or you could use this opportunity to pay the debt off quicker.
Is Debt Consolidation Always a Good Idea?
Debt consolidation might sound appealing if you’re feeling overwhelmed by your outstanding credit card balances.
Before diving in, though, you should understand that debt consolidation is not a universal solution.
This approach works best as part of a longer-term financial plan. You’ll need to give the issue some serious thought before you decide whether it would work for you.
Ask yourself the following questions:
- Are you fully committed to changing your behavior? You should spend less than you earn, stop charging anything to your credit card and commit to a savings scheme
- Is your income sufficient to pay off your consolidated debt within 5 years?
- Does your total amount credit card debt come to half your gross income or less?
If you answered “Yes” here, debt consolidation might be a sensible option for managing and repaying your credit card debt. If you’re unsure, it probably isn’t the right fit.
Debt consolidation is highly effective if you stop doing the things that caused you to accumulate the debt. You’ll need to make some lifestyle changes to achieve your financial goals. If not, you could end up moving the problem rather than solving it.
Credit Card Debt Consolidation: Getting Started
The best way to get started is to consolidate debt onto a credit card with an introductory rate of 0% APR. This will give you chance to pay down your balance without interest getting in the way.
This offer will come to an end, so it’s crucial to have a fixed repayment plan in place before you initiate the balance transfer. This will allow you to maximize the benefit of the interest-free period.
The Chase Slate credit card is expressly designed to help consumers pay off credit card debt via balance transfers. The card attracts no fee if you shift balances within the first 60 days of opening your account. After this, you’ll pay a 5% fee to transfer any balance. The card gives you 15 months at 0% APR for balance transfers. There’s no annual fee with this card.
Alliant Credit Union issues two credit cards: the Visa Platinum Rewards card and the Visa Platinum. Both cards come with 12 months of 0% APR and neither has an annual fee. Balance transfers are typically fee-free, too.
How Does Your Credit Score Affect Debt Consolidation?
When you’re looking for credit cards, you’ll need a good credit score.
Here are some simple ways to improve a flagging score:
- Make all payments in full and on time and in full
- Do not open many new accounts at one time, and don’t close multiple accounts either
- Cut down on the number of hard inquiries on your credit report
- Pull your report and look for any errors
How to Consolidate Credit Card Debt With Loans
If you have above-average credit, you may qualify for a debt consolidation loan. This will attract a higher rate of interest than the majority of balance transfer cards, but you’ll get the chance to pay off your balance over a fixed term.
If you don’t like the idea of another revolving line of credit, and you want the security of a guaranteed payoff date, this could be a good solution.
The process works similarly to a balance transfer credit card. You apply for a personal loan or an installment loan for an amount high enough to service your credit card debt.
If approved, the lender buys the debt and places it on your loan. This should be at a much lower rate of interest.
Debt consolidation loans from credit unions are an alternative if you don’t fancy this approach. Credit unions are usually flexible and work with more people than banks.
You could also consider peer-to-peer lending for the consolidation of credit card debt. This is an attractive option if you can’t qualify for a regular loan at a traditional bank. These loans often have low rates of interest and favorable terms, so they’re well worth exploring.
Can Debt Consolidation Affect Your Credit Score?
Your FICO score is based on 5 components:
- Payment history: 35%
- Amount owed: 30%
- Length of credit history: 15%
- Credit mix: 10%
- New credit: 10%
Debt consolidation can affect your credit in various ways, both good and bad.
When you apply for a personal loan or credit card for debt consolidation, this registers as a hard inquiry on your credit report. Too many of these can impair you score with each inquiry causing your score to fall by 5 points or so.
Also crucial is your credit utilization ratio. This is the relationship between your available credit and the amount of credit in use. Keep this at 30% or below.
By opening a new line of credit or a new loan, could help you to reduce your utilization ratio, providing you don’t close any cards.
How About a Debt Relief Agency?
If you’re unable to get approval for a balance transfer credit card or a loan, it could be time to look into whether a debt relief agency or maybe even bankruptcy might be a smoother fit. Both of these are avenues of last resort, and you should pursue either lightly.
A debt relief agency will negotiate with creditors on your behalf. The aim is to get a lower rate of interest on outstanding unsecured debt. Sometimes, they could even get your total balance reduced.
Unfortunately, this is an industry filled with companies using questionable tactics. There are some good agencies out there, but finding one can be tough.
Make sure you fully research the agency, the costs, how the agency will make payments, and – perhaps most importantly – look at plenty of customer reviews. If you encounter lots of complaints through the Better Business Bureau, look elsewhere.
Most agencies will insist you close any credit cards they’re helping you to pay off. This could temporarily damage your credit score.
An agency will also charge a fee calculated as a percentage of the debt being consolidated.
Pursuing bankruptcy will also involve legal fees and will pummel your credit score for several years. It takes 7 years to fully rebuild your credit after bankruptcy.
Consolidation Is Useless Without a Plan
Work out a budget so you can better understand your income and expenses.
Review your spending and write down your future goals.
If you’re considering debt consolidation, all that counts is finding a plan that works and then committing to it completely. Avoid taking on any new debt, too, as this will just slow you down.