Beat Debt with a Debt Consolidation Loan
Since the country began its gradual descent into recession, countless companies have been forced to make massive cutbacks, laying off nearly 3.5 million workers. The United States Department of Labor reports that these layoffs occurred in such industries as manufacturing, construction, education, wholesale trade, real estate, insurance, technical and transportation, to name a few. Considering the industry-panning spectrum of businesses that have been affected by the slumping economy, some might be surprised to learn not a single credit card company appears on the Department of Labor's list. That's because while most of the country is trying to beat debt in these financially challenging times, credit card companies are continuing to prosper from it.
The Revolving Credit Trap
There are plenty of times when credit can prove to be a problem-solving ally, bailing people out of financial dilemmas, saving them in emergency situations or helping them purchase essentials they couldn't otherwise afford. Furthermore, being able to use that credit by presenting a handy plastic card is far more convenient than obtaining a traditional installment loan, which involves stacks of paperwork and a lengthy approval process. However, as with most things in life, the convenience comes at a cost. While an installment loan involves calculating the interest on the total borrowed amount and setting up a fixed payment plan, revolving credit involves continually recalculating the interest based on the account's current balance. So while you might be working with a fixed interest rate, the amount of interest you actually pay varies and remains limitless. For people trying to beat debt, it's an uphill battle.
The Trick of the Trade
The reason credit card companies have continued to thrive in a sagging economy is they've long operated on an ingenious system that guarantees a minimal loss of customers. By charging cardholders a low percentage of the balance every month, usually 2 percent, revolving credit companies receive just enough to cover that month's interest. That leaves the virtually unchanged balance to be transferred to the next month's bill, at which time new interest is added for the customer to pay off again. For the millions of consumers who have maxed out their credit cards during this economic crisis, attempts to beat debt may be a futile task as they may never pay off their balances.
Help Has Arrived
With the aid of a debt consolidation loan, you can beat debt. By paying off the balances of your revolving accounts with one fixed-rate loan, it will combine your monthly expenditures into one low payment and put all of the money that would have gone to superfluous interest charges back into your pocket. And best of all, a debt consolidation loan will put you on the road to a financially secure future by allowing you to actually pay off your balance, allowing you to finally break free of the revolving credit trap.