You’ve got so many bills coming in monthly you can barely keep up. You live in fear that you’ll one day miss a payment, a no-no in terms of your credit score. You would also like to save money and get those debts paid off just a little bit faster. But what’s the best form of credit consolidation? Well, let us look.
Just What is Credit Card Debt Consolidation?
At its essence, credit card debt consolidation is combining multiple credit card balances into a single monthly payment. That simplifies bill paying since, rather than having several debts of varying amounts and due dates to contend with, you have just one – hopefully with a better interest rate that will save you cash and permit you to pay off the balance quicker.
You can take out one of these – a personal loan, really – to consolidate your debt. You can get one from a bank, credit union or online lender. Credit unions generally have the most lenient eligibility requirements, although if you are a longtime customer in good standing with your bank, you should try there as well. Online lenders offer the benefit of “prequalification,” which gives you a good idea of what kind of terms you qualify for.
Such loans typically come with flexible terms ranging from a year to 60 months and have fixed payments. No more trying to keep track of how much you owe and when payments are due. You may even land a lender that will pay your creditors directly.
Note that you’ll need a good to excellent credit score to nab an interest rate that’s better than the one you’re now paying. If you don’t qualify for that, then credit card consolidation isn’t worth the hassle.
Balance Transfer Card
Occasionally, credit card companies issue balance transfer cards that offer 0%-interest during the promotional or introductory period. If you have a bunch of high-interest credit card debt, you can shift those cards onto the new one, then make monthly payments to pay those off. You’ll need a good score to qualify for one of these puppies. You also must be certain to wipe out your new debts before the promotional period expires – usually within 12 to 18 months — and the interest rate goes back up. Check out credit card consolidation at bills.com.
Home Equity Line of Credit
If you own a home that has gone up in value, or the balance has decreased a good deal, you can use the equity to consolidate your debts.
With this strategy, you’re going to get a great rate, which reduces your payment size and allows you to pay down the balance quicker. Be careful here, though: the relatively low interest rate is because your house serves as collateral. You could lose said house if you mess around and default on payments. So, take extreme care here.
This is an additional way to get money to consolidate your debts. A marketplace lending platform called Peerform pulls together those who seek loans with individuals who are open to investing. The aim to is produce “wins” all around: borrowing to consolidate debts into a single, manageable payment, and an investor who wants a consistent and rewarding return on investment.
As you can see, the best form of credit card consolidation is the one that suits you best. Go over your finances carefully and make the choice that’s right for you, knowing that, in general, credit card consolidation is a proven and successful strategy.