Debt management is never easy, especially if you have multiple debts to pay off, it can become a huge hassle for you. With all the monthly installments and the huge interests that you have to pay, you can easily get caught in the process. To make things easier and become debt-free in a shorter time span, you should consider credit card consolidation.
What Is Credit Card Consolidation?
In simpler words, if you have an outstanding balance on more than one of your credit cards, you can then apply for a debt consolidation loan to pay off that balance and then repay your loan in monthly installments. It all sounds really overwhelming at first but if you manage your monthly expenses wisely and make strategic decisions, things can work out in your favour.
Choosing debt consolidation loans can become one of your best financial moves only if you manage it properly. By managing, we are referring to the fact that you should make your monthly repayments on time, never miss a deadline and of course, opt for the shortest term to become debt-free as early as possible.
Best Ways To Consolidate Your Debt
Now there are multiple types of credit card debt consolidation loan out there. You just have to choose the one that suits your requirements the best and helps you become debt-free in a short time period.
Starting with;
Use A Balance Transfer Card
When trying to consolidate debt, using a balance transfer card should be one of your first options. A balance transfer card is no different from a traditional credit card. It’s just that these cards come with a lower interest rate and for a limited time period, they offer a 0% APR especially when you have to transfer debt.
What’s best is that the introductory period lasts anywhere from 6 months to 21 months, it all just depends on the type of card you have. During this period you pay no interest if you manage to repay even a minimum monthly payment on time.
Pros
- You can combine all your debts into a single debt and simplify your finances.
- If you manage to pay off all your debt before the promotional period ends, you’ll basically be paying no interest at all.
Cons
- The interest rate will revert back and if you don’t clear your debt before the promotion ends, you’ll end up paying more interest than all of your cards combined.
- Sometimes the introductory rate doesn’t apply on new purchases and it’s only for balance transfers
Home Equity Loan
If you have lots of high interest credit card debts to pay then taking a home equity loan is another great option for you. It’s like taking another mortgage on your home. In simpler words, you get the money against the equity that has increased over time in your property. It’s best for those with bad credit credit cards as it comes with a fixed interest which makes it easier for you to manage your monthly payments.
Pros
- You’ll be out of debt sooner as these loans come with lower interest rates so in the long run you’ll be saving yourself some money. Moreover, the fixed interest is another plus which people usually worry about when consolidating their debts.
- You won’t have to make separate payments every month and it will help you track your finances more efficiently.
Cons
- The main drawback of a home equity loan is that you might end up losing your house if you are late on your payments.
- It will take you a lot more time to pay off your debt if you have a huge amount pending. The mortgages come with a term of 15 to 30 years and if you are near to your retirement period, it might not be a great idea to opt for such a long term.
Opting For A Personal Loan
Looking for the best credit credit card to rebuild credit? Try getting a personal loan for a much more predictable pathway to become debt-free and improve your credit score. With a personal loan, you won’t have to worry about paying different amounts of money every month. It’s more like an installment plan where you pay a fixed amount back every month. The trick here is to look for a good debt relief program that helps you get a personal loan with a lower interest rate. This way you will save yourself a lot of money and eventually pay off all your credit card debts without any hassle.
Pros
- The major advantage of choosing a personal loan for debt consolidation is that if you find a lender who offers lower interest rates, you’ll save a lot of money.
- If you manage your finances well and use this strategy wisely, you can even improve your credit card score by making timely monthly repayments.
Cons
- You need a credit score of 670+ for your personal loan application approval.
- Personal loans usually come with higher interest rates and even if you have a good credit score, it won’t impact the interest. However, with a bad credit, you might find a lender who will provide a lower interest rate.
The Pathway To A Successful Credit Card Consolidation
If you are dealing with loans with bad credit then debt consolidation really is the answer to all your problems. The only trick here is to pay off your new loan as early as possible to have a hassle-free and debt-free life.
Stick with your budget
It’s all about how you manage your monthly expenses. The strategy here is to make a budget first and then stick to it no matter what. Make your repayments on time every month, improve your credit score and get rid of the debt.
Setting automatic payments
The one thing that you have to be careful about is missing a payment deadline. To avoid this mistake, just set up an automatic monthly reminder so that you never miss any dates.
Avoid any kind of new debts at all costs
The last thing you should do is to get a new debt after you’ve consolidated your bills. Paying off your credit cards will free up your space to make new purchases but you have to resist that temptation no matter what.
Looking for a debt relief program that tailors to your needs? Try Mountains Debt Relief and find out the best solutions on how to become debt-free in no time. Contact Now!