Should You Settle for a Credit Card Debt or Pay it in Full

Paying the credit card debt in full is the best choice if your goal is to maintain a good credit. It is easier and does not require you to negotiate with the lender. You have the option of taking out a debt consolidation personal loan or using a balance transfer credit card to pay off the debt in full. Whether you are signing up for a loan or a balance transfer card, make sure you always do research on a shopping comparison search engine before coming to a decision.

For a debt consolidation personal loan, you should calculate and see if the total amount you pay including principal and interest is lower than the total monthly payments you are making to the credit card companies. If you decide to apply the 0% balance transfer card, make sure to check how long the promo period last. You also want to check the credit limit of the balance transfer card so that you know whether one card is enough for transferring all your balance.

As you make the monthly payment, you will be able to establish a solid credit score in 6 months or more. It is important to be punctual in making payment to avoid losing the interest fee. You will be able to pay it off fast since the interest fees are reduced. It also means that you have more leftover money for putting away as emergency funds or other financial goals. Consolidating your debt will help to ease your worry about not being able to pay your bill on time.

On the other hand, if you want to pay as less as possible, you can get a debt settlement for your credit card debt. It allows you to pay off your debt in a lump sum. The downside is that your credit score will drop. In debt settlement, you pay a monthly amount to the debt settlement company which will be deposited into an account. During this time, you are not allowed to make payment to the credit card company.

Your credit score will suffer since the credit card company will report you to the credit bureau. Getting a debt settlement is best for people whose credit score is already very low or their account has been sent to the debt collection agency as it won’t have much effect on your credit score.

When it reaches the desired amount, it will be used to pay off the negotiated amount. Once you settle the debt, it will record as settled on your credit report. If the creditors see your account is settled, they may view you as a risky borrower since you fail to pay back the original amount you borrow. The settlement record will remain on your account for up to 7 years.







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