Taft Financial personal finance and debt consolidation offers are bait and switch. Taft Financial has begun flooding the market with debt consolidation and credit card relief offers in the mail with the website My Taft Financial. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect.
The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2020 Reviews, the personal finance review site, has been following Taft Financial, Tate Advisors, Plymouth Associates, Credit 9, Americor Funding, Safe Path Advisors, Silvertail Associates, etc.).
Best 2020 Reviews closely monitors personal loan offers, debt reduction, and credit card consolidation offers sent through direct mail to consumers.
If you are struggling with credit card debt, you’re not alone. Many people are increasingly struggling to pay off debts accumulated by using credit cards. These cards can be addictive because of their ease of convenience. However, the inability to pay the debt, coupled with a high-interest rate, can lead you to a lot of trouble.
The smartest and one of the best strategies to pay off credit card debt is debt consolidation. There are multiple benefits to consolidating your debts. For example, it will save you costs, make the debt easier to pay off and reduce the debt’s time frame.
However, there are some risks involved in this method, which is why it is best if you understand how to effectively get credit card relief to ultimately become debt-free. This guide will provide you with everything you need to know about debt consolidation and the main approaches you can use under it.
What is Credit Card Debt Consolidation?
This involves combining or streamlining all of your outstanding credit card balances into a single loan or monthly payment plan. This is ideally done at an annual percentage rate (APR), also known as the interest rate that is much lower. Doing so not just lowers the interest rate, but it also makes the debt easier to manage and quicker to pay off.
There are four main commonly used approaches within credit card debt consolidation. These include using a balance transfer credit card, applying for a personal loan, tapping into your home equity, and considering a debt management plan. Before choosing which approach to use, here is a closer look at each of these approaches and their pros and cons.
- Balance Transfer Credit Cards
If you have a good credit score, you can consider using a balance transfer credit card. Through this method, you will shift all of your existing credit cards to a new credit card that has a much higher limit and a lower interest rate. Of these credit cards, most, if not all, offer an introductory 0% APR for the first few months (usually ranging between 6-18 months). This means you will not have to pay any interest rate.
However, you will likely have to pay a transfer fee when you shift your balance to a new credit card. Since the APR lasts for a maximum of 18 months, you will need to have a plan in place to quickly pay off the debts; otherwise, if you delay it, you might have to pay much more because then the interest rate may be very high.
- Apply for a Personal Loan
This is another credit card debt consolidation method you can consider using if you have an excellent credit score. In this method, you will have to take out a personal loan and pay off all your credit card debts. Though they do not come with a 0% APR, personal loans do have a fixed interest rate and set repayment terms, so paying them back is fairly manageable.
If you have a good credit score, you will not have to pay a high-interest rate. Therefore, you should find a lender who is offering a low-interest rate. Moreover, it will not harm your credit score either because personal loans are considered installment loans.
- Tap into Your Home Equity
If you own a house or a considerable amount of assets, you can consider using this equity to pay off your credit card debts. You can do this by applying for a home equity loan and use the money to pay off the debts. Alternatively, you can consider going with a home equity line of credit (HELOC).
Since you secure your home or other property as collateral, these two strategies include a lower interest rate than personal loans. However, they are quite risky because if you cannot pay back the lender, you might be forced to sell your house.
- Consider a Debt Management Plan
If you are having trouble with transferring your balance, applying for a personal loan and using your home equity, you can consider a debt management plan. In this approach, you hand all the responsibility to a credit counselor or credit counseling agency to help set up a debt management plan for you.
The credit counselor will analyze your financial situation and all available options and then find the right path for you. Often they contact the creditors and negotiate with them the terms of the debt, interest rate, lower monthly payments, or debt forgiveness.
You will have to pay the agency a small fee, alongside the monthly payments, which they will forward themselves to the creditors. This strategy can be useful because it will not require you to put your home or assets on the line.
However, some debt management plans will require you to close your credit accounts, which can have an adverse impact on your credit scores. Additionally, you must find a trustworthy agency and avoid scams because you will be handing over all your financial information to them.
Look into Strategies for Debt Repayment
If none of these debt consolidation approaches suit you or appeals to you, you can alternatively consider the following debt repayment strategies.
Debt Avalanche: This involves paying off your debts with the highest APR first and then paying the others while simultaneously making the minimum monthly payments for all of your debts.
Debt Snowball: This method requires you to pay off your debt with the smallest balance first and then the other ones while simultaneously making the minimum monthly payments for the other debts.
The Bottom Line
Debt consolidation comes in many forms. Each of these approaches comes with its risks, but despite that, they can still help you eliminate your debt so long as you choose the right one for yourself. It is important for you to evaluate your current financial situation, income and financial goals to decide which debt consolidation approach fits you.
The key is to make payments quick because the faster you are, the sooner you will become debt-free and have cash flow that you can spend.