Based on federal laws intended to help consumers, credit card companies have been required to increase their education on debt for credit card holders. That has come with higher minimum payment amounts, an explanation in billing statements of how long a balance will take to pay off, and consumer awareness noticed. However, in most cases, these are still hard to find, printed with small lettering, or don’t really have a noticeable impact. Instead, consumers who are deep in credit card debt have two paths towards gaining control again: find a way to make a big payment to reduce the debt significantly or consolidate the credit revolving debt into a fixed loan for an eventual reduction that doesn’t grow again.
The Role of a Consolidation Advisor
One resource that is available to help people understand how to manage their consumer debt better involves consolidation advice. This role basically helps a consumer review their current debt, and then lays out options available for how to group together various credit card balances into one, fixed loan. The result ends up being better control of personal debt, a limit on how much interest can keep adding up, and progress towards actually paying the debt down.
A Typical Advising Process
The consolidation advisor like Symple Lending and others will take a three-step process to develop a plan for a consumer. The first step is reviewing the current financial scenario the consumer is in. This then tabulates the totality of debt the consumer is facing, as well as the type of debt involved.
The second step is an analysis of all assets, income and monthly expenses that have to be paid, i.e. living costs. It also identifies what the consumer can reasonably do without, freeing up cash flow.
Finally, in the third step, consolidation advisors through the options available for the consumer that are tailored to his or her specific circumstances, especially in terms of what loan consolidation can offer and what to expect in such a change.
Caveats to Remember
One of the biggest mistakes consumers end up making, however, once their debt is consolidated is to go and charge more debt. All that ends up doing is doubling the problem. Consolidation only works when a person stays disciplined to not create more debt on top of what they are trying to manage and reduce in the first place. In fact, it should be the catalyst to find a way, at the same time, to earn more income, whether that’s as a second job freelancing or gaining a promotion towards greater income in a monthly paycheck.
Consolidation advice can definitely help with consumer debt, but it’s a partnership versus a one-way street.
