People often experience the pressures of being in debt to multiple credit cards. In order to relieve this stress, opting to consolidate all of your credit card debt will relieve the burden of having to pay off multiple cards at once.
Here is what you need to know when you consolidate you credit card debt. When you consolidate your credit card debt, it is important for you to choose how you want to go about doing this. Your options include enrolling into a debt management plan, getting a new credit card or taking out a loan to cover your debt.
The choice is yours, and the route that you go will ensure that you are able to pay off all of your card debt. As a result of this, you will be left with only one payment to be made monthly. With the advantage of having only one monthly payment, the opportunity to save more money presents itself. Now, you only have to pay a single interest rate instead of multiple. Ultimately, your current situation will determine the best way for you to eliminate your card debt.
Here are some tips to help you when deciding how to consolidate your credit card debt.
Review Your Credit Score and Report
When was the last time you checked your credit score? Making sure that you know exactly what your score is and what accounts are open on your report will aid you in qualifying for the consolidating of your debt. Annually you are provided with a free credit report from the top three credit reporting agencies. Review your score through one of the following agencies: Equifax, Transunion or Experian. After getting clarity on the status of your credit, you will be closer to knowing which route to choose.
Research What’s Available to You
Consolidating your debt is secure in many ways, but you must do your research beforehand to find what will align best with your current situation. Depending on the status of your credit, your options may be limited. Along with this, some options don’t come with a high interest and are priced within a desirable budget.
Using Credit Cards to Eliminate Your Debt
For those of you who have credit in very good standing, finding a card that has a low-interest rate will benefit you well. You will save money when you convert all of your balances to one single card that has a lower APR. Each month, as you are paying your monthly bill, you will save additional money on finance charges. If you have good credit, there is a possibility that you will be eligible for a balance transfer that has an interest rate of zero percent.
Loans for the Consolidation of Personal Debt
With personal loans, a simple interest charge will be in place. This ensures that your debt is paid off according to a strategy that is set in stone. Personal loans are usually paid within three to five years. You can visit your bank or your credit union to apply for a personal loan. It is important that you ask the designated lender questions regarding the requirements for credit. Having excellent credit will put you in a good position for qualifying for an interest rate that is low.
When researching lenders that are online, check their credibility through the Better Business Bureau. It is important for you to verify that the lender you are applying for a loan with is eligible to do business in your state. You can find out this information by speaking with someone at your state’s Attorney General’s office as well as by contacting the Department of Banking or Financial Regulation in your state.
Lenders that offer you a loan regardless of your credit should be thoroughly investigated. If a lender is requiring you to pay high fees upfront, it’s best to find another lender.
Finding an Alternative Way to Manage Your Debt
Sometimes transferring your balances isn’t always an option. In this case, connecting with a recommended debt counseling company will be able to aid you in finding the best strategy to lower and eliminate your debt. A credit counseling agency will put you on a path that will allow you to make one monthly payment to the agency. The counseling agency will then make a payment to each of your cards until they are all paid in full. The management plan typically takes three to five years to complete.
No matter which option you choose to eliminate your card debt, it is very important that you commit to the path that has been set. These strategies are designed to help you get out of debt. If you don’t adhere to the path, you will remain in debt.