According to www.forbes.com, Americans owe almost $1 trillion of debt on their credit cards. Credit card debt consolidation can be extremely helpful as it can help in simplifying as well as reducing the monthly payments on your credit card, which will help you to save a lot of money every month. There are numerous ways in which you can consolidate your unwanted debt. Consolidating your credit card debt can help you to become free from debt with time. Consolidating the debt on your credit card means that you have to combine numerous balances of the credit cards into one payment, which has a low rate of interest in comparison to what you are paying right now. However, you have to understand that the process takes time and you also have to complete the process of application and understand whether you are going to receive approval for the debt consolidation loan. To understand whether this method is appropriate for you, you can consider the several methods that have been listed below.
Work with nonprofit credit counseling organizations
A credit counseling organization is responsible for reviewing the entire situation that you are in and work accordingly and creates a plan to take care of the financial challenges that you are facing. They will provide advice regarding the credit issues, money management, managing the unwanted debt, and most importantly, budgeting. If you are working with a credit counselor, you must research the company before you are starting. Ensure that you are checking with the office of the attorney general of your state as well as the consumer protection agency to make sure that it is reputable.
Advantages associated- The organization can work with all your creditors and set up an ideal plan, which will require you to send a single amount every month to the organization. The organization will use this money and pay money to the creditors. The credit counselor can also work with the creditors and lower the rates of interest and try to waive certain unwanted fees.
Apply for personal loans
Personal loans can be used for consolidating debt and the funds that you get from the debt consideration loan will be used to create the balances on your credit card. Therefore, as opposed to making numerous payments on your credit card every month, you have the option of making a single payment for your loan.
Advantages associated- In case if you have the ideal credit, it is obvious that you are going to qualify for lower interest rates. A personal loan is responsible for offering flexible terms of payment and you have the option of selecting the perfect one that is going to be best for the budget that you have. Apart from that, new lenders will also be responsible for sending the payment directly to the creditors. This will ensure that you are not getting tempted and using the funds for anything else. Numerous lenders are also responsible for offering the unique option of prequalification, and therefore, you have the freedom of shopping around and understanding the best options, which will not have any impact on your credit score.
Use balance transfer credit cards
Balance transfer credit cards help in moving the balances from a single or numerous credit card accounts to a completely different card. The balance transfer credit card is responsible for offering an introductory APR of 0% on the balance that you transfer within a particular time.
Advantages associated- If you are clearing off the balance that you are going to transfer before the expiry of the introductory period, you can avoid paying the unwanted interest charges on the balance that is transferred, completely.
Ask friends or family members to help you
Depending on the total amount of money that you owe to your creditors and the entire financial picture, it is going to make sense to request any family member or a close friend to lend the money to you. However, if you are opting for this particular method, you must know about the terms associated with the loan as well as the plan of repayment that is outlined. This should be similar to getting a loan from financial institutions.
Advantages associated- When you have the option of borrowing money from a person you already know, the advantage is that you do not have to worry about meeting the eligibility requirements that are necessary to get a loan. Apart from that, the rate of interest can be low, in comparison to the interest rate that you would get from the credit unions or banks.
An important thing that you have to understand is that borrowing money from your family members or friends can become tricky because it can hurt the relationship that you share with them. Also, if you cannot pay them back on time, you will be putting their finances at a huge risk.
Given below is a list of the other methods of credit card consolidation, which are comparatively riskier than the methods that have been mentioned above.
Cash-out auto refinance- Few lenders are responsible for offering cash-out auto refinance loans, which will permit to use the equity within the car for issuing a loan for various other expenses, which include consolidating credit card debt. To know more about cash-out auto refinance, you can visit NationaldebtRelief.com.
Retirement account loan- If you are participating in employer-sponsored retirement accounts, it can be extremely tempting to use this for clearing the debt. The rates of interest are going to be lower.
Home equity loan- Home equity loans allow you to borrow money against the equity of your home and help you to make use of the cash to pay for anything. This is a good option because of the rates of interest in comparison to personal loans or credit cards.
Consolidating the debt on your credit card into one payment is going to be the solution to the financial problems that you are facing. Make sure that you are going through the plans that have been mentioned above so that it becomes easy for you to consolidate your credit card debt.