Refinancing Credit Card Debt- Short-Term Pleasure, Long-Term Pain

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Database states that there exists almost a trillion dollars of credit card debt in US with more than 65% of Americans spending almost all, and saving none. Such a situation is an alarming feature for an economy, especially when it belongs to a developed country. The scenario presents a condition where the Americans are being choked with unsecured debts. Under such a circumstance, refinancing credit card debt could be really a tough job. Frankly speaking refinancing credit card debt is similar to treating an almost- dead man with medicines.

Home equity loans could be one effective way of refinancing credit card debt, depending on your existing dues and the equity in the house. These loans can help the debtor in consolidating with one much lower loan than all the other loans combined. This loan is based upon few features like:-
•    Amount of actual ownership one has on his residence.
•    Whether a large down payment was made or not.
•    The number of year’s when payments were made in time.
 
It has been seen that home equity loans have variable interest rates which could fluctuate with the market conditions, but either ways they are far better than the high interest rates imposed by the unsecured debts.

Under the current reeling financial situation it has become quite important to maintain a FICO score of at least 750 to be eligible for banking loans, and credit unions. The most important thing to note here is that the FICO score is not based on just the timely payments, but on how much charge the account is holding. Those accounts with more than 50% would not be eligible for the loan. This turns out to be a vicious circle for the cardholder who requires the option of refinancing credit card debt, for the most constructive solution may be the one not in reach due to the presence of the unsecured debts.

Other refinancing credit card debt lending sources like loan companies do provide credit card debt help but they charge a higher interest rates, though it’s available for larger number of customers. The one reliving feature of these high charged loans are that it can be repaid over a larger span of time. Though the cost of refinancing credit card debt is higher for these loans but the sum to be paid is somewhat lower than the present multiple accounts paid monthly.

The basic issue is not on how refinancing credit card debt can be done, but on which option to work out to get over from this debt trap. Most of the Americans after encountering the reeling financial situation of debts have now decided and opted to frugal living for a better economically stable life. Guess this is the most prudent decision required to be made by each and every individual stuck with dues and credit card debts.

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