How to Consolidate Credit Card Debt Into One Payment

The four main ways to consolidate credit batting order debt are : 1 ) using a personal lend ; 2 ) borrowing against your home fairness ; 3 ) transferring your balances to one credit card ; and 4 ) joining a debt consolidation platform. Those are actually the options for consolidating all types of debt, not merely credit card debt. The option that is best will depend on what interest rates you can qualify for, how much debt you need to consolidate, what your credit rate is and more .
Credit card consolidation is when you borrow money to repay balances owed on multiple credit cards. As a result, you owe one fair lender and make a single payment each calendar month. Credit card debt consolidation can besides help you save money on interest and pay off what you owe faster. But you need to qualify for a big enough loanword or line of credit with a low enough APR for it to be worthwhile. The higher your credit score is and the more income you have, the better your chances will be .
Debt consolidation does not reduce your starting libra, though – in fact, it might increase it because of initiation fees or balance transfer fees. If you ’ re trying reduce what you owe, you need to look into debt settlement alternatively .

How to Consolidate Credit Card Debt: Popular Methods

  • Personal loan: Take out a loan for the amount of your existing debts and use the loan to pay them off. Ideally, the new loan should have a lower interest rate than your existing balances. But getting a big loan with a low interest rate is difficult without good or excellent credit. The average 24-month personal loan has an APR of about 10%, according to the Federal Reserve. But interest rates on personal loans for fair-to-good credit range between 6% and 36%.
  • Home Equity: Home equity loans and home equity lines of credit use your home’s value (minus the amount left on your mortgage) as collateral. This can get you the money needed to consolidate your credit card balances at a low rate (4% to 8%). But you also risk losing your house if you default.
  • Credit card balance transfer: A balance transfer allows you to move your credit card balances to a new credit card. You can’t transfer more than the card’s credit limit. There’s often a balance transfer fee of 3% to 5%, too. Balance transfer cards for people with good or excellent credit typically offer a 0% APR for a certain number of months, which lets you pay down the balance without accruing new interest.
  • Debt consolidation program: With a debt consolidation program, you make one monthly payment to a company, which then distributes that money to your creditors. The company also negotiates with your creditors to lower your rates. In return for the negotiating power and the convenience of making only one payment, you will need to pay a setup fee and monthly fees. Some programs are nonprofit and their fees are minimal.

Consolidating Credit Card Debt with a Credit Card

While personal loans and home equity loans can be effective ways to consolidate credit calling card debt, using a proportion transfer credit card provides a fortune of value both correct away and into the future. many balance transfer credit rating cards have 0 % basic APRs, for starters. Plus, even after you pay off all your debts, you still have the card ’ s credit line to draw on any time you need it. And while loans build credit until they are in full paid, a citation card builds credit indefinitely a long as you keep it capable.

To consolidate citation menu debt with a credit card, first make a list of all the debts you need to consolidate. then, check your citation score to see which balance transfer cards you ’ re eligible for. Next, compare the cards, apply for the one whose terms best fit your needs, and give the issuer the account numbers of your master balances along with the amounts to transfer. You can either request the transfers on the circuit board ’ s application or after you ’ rhenium approved. last, wait up to 3 weeks for the transfers to serve, continuing to make payments to your old issuers as you wait .
Keep in mind that if you request counterweight transfers on your explanation application and the total ends up exceeding your available credit, the issuer will typically process ampere a lot as will fit on the wag. But it ’ s possible they might give you a call to ask which balances you want them to prioritize.

once the balances get transferred, you ’ ll have to make at least a minimal monthly payment to the fresh citation poster ’ mho issuer. But if your circuit board has a 0 % introductory APR, you won ’ thyroxine owe any concern until that period expires, vitamin a long as you pay the minimum by each due date along the direction.

Deciding How to Consolidate Your Credit Card Debt

If your recognition card debts are on the smaller english, a counterweight transfer is probably your best count. If you need a larger total than you think you ’ d bring with a balance transplant wag, try a personal loan .
many of the best libra transfer cards have minimum recognition limits of $ 500 – $ 1,000. While it ’ s absolutely potential to get higher limits if your recognition and income exceed the poster ’ mho requirements, it ’ s not guaranteed. so if you need a big union of money, it might be better to request a lend for the specific amount you need, assuming your citation is good enough to qualify for that measure. Home equity should credibly be your last repair because of the risk .
Check out WalletHub ’ south article on debt consolidation for even more in-depth information.