If you have a number of balances on credit cards, then you might be considering consolidating your credit card debt. Consolidating debt gathers your higher interest rate debts (such as credit cards) and rolls them over into one lower interest rate payment.
By reducing the total interest you pay, it reduces your total debt and helps you to pay it down quicker.
There are three main ways for you to consolidate your debt. The first is to take a low interest (or zero percent interest) credit card balance transfer offer. If a credit card offers you this arrangement, it will allow you to receive this lower interest rate until the end of the promotional period.
You should make it a goal to pay down the balance within that time frame. The interest rates typically default to a much higher amount after the promotional period ends.
The second way is to obtain a fixed interest rate debt consolidation loan. You use the loan money to pay off the credit card debt. The instalment loan allows you to pay this back in monthly payments over a pre-determined term.
Finally, you could also take a home equity loan and use the money to consolidate your credit card bills. There is a risk involved in this if you do not make the loan payments; you could lose your house to foreclosure. In all cases, your options will be limited by your credit profile and score and debt to income ratio.
Good to excellent credits scores range from about 700 to 850 and will give you more options to consolidate your credit card debt into a single payment.
Consolidating your debt is a strategy that you can easily pursue without having to seek a credit repair firm or lawyer’s help.