Neon Funding and Cobalt Advisors: The Worst Way to Consolidate Your Credit Card Debt

Neon Funding  has joined Cobalt Advisors and Apply Credit 9 and Saxton Associates in flooding the market with debt consolidation and personal loan offers in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2020 Reviews, the personal finance review site, has been following Neon Funding, Cobalt Advisors, Saxton Associates, Hornet Partners, Piper Funding, Carina Advisors, Corey Advisors, Pennon Partners, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc.).

Credit cards give people the freedom to spend more money than they can typically afford. The drawback of using these cards too often is that you may end up in heavy debt. This debt could be especially challenging to manage if it is composed of multiple credit card debts.

Handling multiple credit card debts is tricky because each one may have a different issuer. As a result, they may have different payment dates which are hard to keep track of.

Missing any one of your monthly payments could damage your credit score and result in penalties that add to your total debt. If you’d like to avoid making multiple payments per month, you should consolidate your credit card debt.

How does credit card debt consolidation work?

Debt consolidation combines all your credit card debts into one manageable debt. This process is carried out by taking out a large consolidation loan at a low interest rate, and using it to pay off your credit card debts.

The benefits of consolidating your credit card debt

There are many advantages of using consolidation loans to get out of credit card debt. These include:

One payment per month

By taking out a consolidation loan and paying off your credit card debts, you are reducing the number debts you are responsible for. Once you do this, you will be responsible for making only one debt payment per month. This single payment should be easier to keep track of, so you are less likely to miss it.

Lower interest rates

Consolidation loans are usually offered at lower interest rates than credit cards. So if you use the consolidation loan to pay off your credit card debt, you will benefit from having a lower interest rate on your debt.

Having fewer debt collectors after you

When you miss enough payments on your credit cards, your creditors will eventually get in touch with a debt collection agency. These agencies will send debt collectors after you, and you may be stuck dealing with them regularly.

However, if you can pay off your credit card debts with the consolidation loan, you will be responsible for only one debt. So even if you miss payments on your consolidation loan, you will have only one debt collector after you.

Drawbacks of consolidating your credit card debt

Despite the many benefits loan consolidation provides, it also comes with some drawbacks. These include:

Regular payments

Debtors will need to keep up with their monthly payment on their consolidation loan. If they miss a payment, they will have to pay penalties that could get added to their debt. If you are bad at managing your finances, loan consolidation may not be right for you.

Falling into deeper debt

Your consolidation loan is used to pay off your credit card debt. This frees up your credit cards and makes them usable again. However, many people may be tempted to use their credit cards again.

If you have difficulty resisting the urge to use your credit cards, you may end up in worse debt than before.

New terms

Your consolidation loan may be offered on terms that are different from your earlier debts. Many consolidation loans have long term lengths to compensate for their low interest rates. So you may end up paying more interest in total due to the loan term’s longer length despite its lower interest rate.

Should you consolidate your credit card debt?

After hearing all the aforementioned drawbacks, you may be wondering if loan consolidation is right for you. Will it really help you erase you debt? Consolidating your credit card debt is a good idea if you have multiple credit card debts with high-interest rates.

If your primary difficulty is with managing multiple payments, loan consolidation may ease your burden.

However, if you do not have a steady source of income. You could have difficulty making payments on your consolidation loan. Missing your payments will harm your credit score and make your debt worse.

You should take out a consolidation loan only if you are confident you can keep up with monthly payments.

Ways to consolidate credit card debt

There are multiple ways to consolidate your credit card debt. The earlier points referenced consolidation loans and how they can be used to consolidate credit card debt. Two other options are:

Using a line of credit to consolidate credit card debt

Debtors with good credit scores may be able to apply for a line of credit. You can apply for a secure line of credit if you have collateral you can put up.

If you don’t have any collateral to offer, you can apply for an unsecured line of credit. However, these usually have worse terms than secured lines of credit.

Debtors that use this option typically look through different lines of credit and compare the offers from each one. Once a credit line is chosen, it is extended to the debtor.

The debtor then uses the funds from this credit line to pay off their credit card debts. The debtor will have to pay back their credit lender through monthly payments over time.

If you consolidate your credit card debt using this option, you will be risking your collateral if you are using a secure line of credit.

Using balance transfer cards to consolidate credit card debt

If you have a very good credit score and haven’t missed payments on your debts, you may be eligible to apply for a low-interest credit card. Debtors can use these cards to transfer their debt from their existing credit cards to these new ones.

These new cards are sometimes offered with 0% annual percentage rates (APR) for a limited time. They may also come with little to no transfer fees, which makes them useful for consolidating credit card debt.

Some balance transfer cards can be used for up to two years before they start charging interest. So this option may be helpful for debtors who need more time to pay off their debt. However, as mentioned earlier, this option is only available to debtors with good credit scores.


Consolidating your credit card debt may not work for everyone, but it has been proven to provide relief for debtors that are juggling multiple high interest debts at once.

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