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As the following video explains this will depend on the type of loan you can get to pay off these credit cards. If you were able to get a personal loan at, say, 9% it could make sense.
A 48-month payoff
As you saw in this video, if you could pay $600 a month on those credit card debts it would take you 31 months to get rid of it and would cost you $3,097.97 in interest. If you were able to get a 48-month debt consolidation loan for $15,000 at an APR of 8.253%, your payment would be about $367.
That’s a savings of $233 a month.
Be aware that you’re basically trading time for money because it would take you 17 more months to pay off the loan.
Debt settlement has another big plus as it represents the only way to get credit card debts reduced. While there are other options for dealing with big debt such as getting that personal loan, consumer credit counseling or a balance transfer all of these merely move your money from one set of lenders to a new one. In comparison, when a debt settlement company settles with one of your lenders it will do so by offering a lump sum payment but for less than your balance. In fact, a good debt settlement company is often able to get debts reduced by 40% or even 50%.
Do the math
If you think that debt settlement might be a good option, you need to do the math before contacting any debt settlement company. Debt settlement companies are for-profit firms and generally charge a fee of anywhere from 15% to 25% of your total debt. Getting back to that $15,000 example a good debt settlement firm might be able to get that credit cards debt cut to $7500. Assuming you’re charged the maximum fee of 25% their fee would be $3750. Subtract that from the $7500 it’s saved you and you would still have a net savings of $3750, which would certainly make debt settlement a very good option.
If you’re struggling with credit card debt, there is help out there. Check out the best ways to reduce your debt without a debt consolidation loan at National Debt Relief