In the United States, a significant number of people experience financial problems because of their debts. As stated by the United States Federal Reserve, the total amount of debts of American consumers in 2007 reached over $2.4 trillion. Of this number, about $880 million is from credit card debt. The rest comes from debts for mortgage loans, auto loans, and others.
If you own a credit card, ask yourself, do you manage your finances wisely with it? Or are you one of millions of people who have overdue payments on your credit card bills? The Center for Media Research in the US said that about 51% of the American population possesses more than one credit card. Also, from the same resource, about 14% of US consumers use more than 50% of their allowed credit line, and this group owns an average of 6.6 credit cards! It isn’t a wonder that people mismanage their money and are unable to monitor what they are spending on their credit cards.
With these overwhelming statistics about debts, it should be obvious why many banks and other financial institutions offer services for debt help. One of the options you can choose, if you find yourself stuck with hundreds to thousands of dollars in debt, is to go for bill consolidation. Bill consolidation is a type of loan in which the loaned amount is used to pay off existing debts from credit card bills, insurance bills, cellular phone and utilities bills, and many more.
Bill consolidation is a welcome option for the millions of Americans who are not able to balance their credit cards anymore. According to credit card monitoring sites, the average interest rate for credit card companies is 19%, which explains the reason why people with outstanding credit card balances are unable to bounce back in their payments. Missing out on a month or two in your payments leaves you with a ballooning overdue balance, which can be difficult to pay immediately.
When you apply for bill consolidation, you need to amass all your existing bills, and present them to the bank or financial institution offering the loan. Your lender will then calculate the total amount you need to wipe off your debt, and when you are approved, you will be given the loan. You now have to determine a monthly payment scheme with a fixed interest rate, so you can pay your bill consolidator for the loan you received. This is better than juggling more than one credit card bill, and having to deal with huge interest rates of different card companies.