Usually, any type of debt is a headache, be it a credit card debt or any other! The fact, that your financial health is also not sound, affects your mental peace. Knowing about the pros and cons of settling your debt would help you take a fair decision, favoring your financial condition. Often, only the advantages of this process have been emphasized. However, as we proceed, we will also highlight some of the possible adverse consequences related to this. Nonetheless, the decision whether to go for it or not, lies entirely in your hands.
- Lowered Interest Rates: If you call up the credit card company and ask to renegotiate on the interest rate, then certainly, you would gain the benefit of paying lesser interest. You would therefore not face much of a problem, managing the finances for it. However, all this would be possible only when the company agrees to it.
- Lowered Monthly Payments: Surely, if the card provider finds you on the verge of bankruptcy, it would lower or cut off some of your monthly payments.
- Finishing it off Once and For All: This is probably the biggest benefit you can reap out of a debt settlement. If you are ready to pay a lump sum amount on which even the company agrees, then just go for it! This is the best chance you can have to finish off this headache, once and for all!
- Savings: This is quite understandable and I need not explain much about it. Lowered monthly payments and reduced interest rates would certainly help you save a lot of money, on a regular basis.
- Extra or More Payment: In the pursuit of saving money and acquiring lower interest rates, the duration of payment may get longer. Therefore, you might end up paying more than the actual amount in the long run.
- Not Eligible for More Credit: Considering your current financial circumstances and the outstanding amount, you might not be eligible for another loan. However, some financial institutions might provide you a loan, but the interest rates for it could be exorbitantly high, which you may not be able to afford, in any case.
- Credit Counseling Problems: Generally, to make negotiations easier, there are debt consolidation and credit counseling companies. However, some might quote interest rates that are beneficial for their company and not for you. And this may land you into more trouble.
- Paying for a Long Time: For some people this might be advantageous, but for others it might prove to be a liability! This is good for those who do not have the money, but have ample time to pay off their dues. On the other hand, people who neither have the money, nor the time, may suffer from the financial point of view.
You can employ several techniques when it comes to credit card debt settlement negotiation. However, see that you ponder over it carefully, and ensure that your decision is wise enough to favor your financial condition in the long run.