How Opening A New Credit Card Affects Your Credit Card Debt

Does Applying For A Credit Card Hurt Your Credit?Accruing credit card debt will make your financial situation worse but when you use credit cards wisely it’s possible that you can improve your situation. For instance, if you open a credit card and only use it for small purchases that you can immediately pay off, you’ll increase your credit to debt ratio and credit score. Unfortunately, many people aren’t disciplined enough to do this so they end up spending more money than they save. This is why so many people need debt consolidation or file bankruptcy.

Understanding the Debt Consolidation Process

With debt consolidation, you’re taking out a personal loan that has a lower interest rate than what your credit cards have. You’ll then use this loan to pay off your current credit card debt so you don’t have to file for bankruptcy. There are some advantages to this (besides not having to file bankruptcy). These include:

  • Instead of having multiple credit cards (each with its own payment due date), you’ll have just one monthly payment. This makes it easier for you to avoid missed payments that accrue late fees.
  • Since you’ll pay less interest you’ll save money over time.
  • You’re paying down your credit card debt so you’re improving your credit score.

Tally vs. Other Debt Consolidation Options

One of the newcomers on the credit card debt consolidation front is Tally. Before understanding how this company works and whether it’s a better choice for you than bankruptcy it’s important to understand what debt consolidation is.

Tally is an app-based program that helps with debt consolidation. Depending on your credit score you may receive interest rates as low as 7.9%. However, you must have a credit score of 580 to participate in this program.

The main thing that sets Tally apart from other credit card debt consolidation programs is that it’s more like a credit card in that you’re offered a revolving line of credit (you can set up an account and pay it down repeatedly as long as your account remains open). If you have a good credit score and can qualify for a line of credit here you’ll be able to erase all of your debt at once.

One thing that you should know about this program is that if you find this helpful, you probably don’t really need it. However, if you have major issues with debt and you’re unable to get a Tally line of credit, your best option is to embrace the help of a consolidation company. If they can’t help you then your only option is to go bankrupt.

Before Borrowing More Money: Stop and Think!

Before you enter into the debt consolidation process it’s important to take some time to think things through. While this can help you break the cycle of credit card debt it doesn’t always mean you won’t end up filing for bankruptcy. At Weller Legal Group in Tampa, FL we have your best interests in mind. Contact us today for a free consultation to determine what your best option is.

Image Credit: VistaCreate