It can be easy to find yourself in way too much credit card debt. If you’ve used your credit cards to pay bills, fund vacations, go shopping or for any other purpose, you might have found that you are in over your head. Many people find themselves dealing with multiple credit card bills and tons of debt, and if you’re in this situation, you could be wondering what to do next. Luckily, you do have an option that might be beneficial: consolidating your credit card debt. Basically, this means that you use one loan or credit card to “pay off” all of your debts to other creditors. Then, you have just one loan or credit card to deal with.
Why Consolidate Your Credit Card Debt?
It might not seem like it will make much of a difference to consolidate your debts. However, this can be a beneficial choice for a few reasons. These are some of the top benefits of consolidating your credit card debt:
- Many credit cards come with high interest rates, but if you can transfer to a card or loan with low or zero interest, you can stop paying these high rates. Depending on how much you owe to your creditors, this can save you hundreds or even thousands of dollars in interest payments, making it easier for you to pay your debts off.
- In many cases, the minimum monthly payment will be much lower if you consolidate your debts. Even though it’s not recommended to only make your minimum payments — if you do, you could end up paying much more in interest, and it can take much longer to pay your debts off — it can be a good thing to not have to pay out as much each month, in case of a financial emergency.
- Dealing with multiple payment due dates and different creditors can be a big pain. With a consolidation, however, you will only have one bill to worry about rather than several.
Options for Credit Card Consolidation
As you can probably see, consolidating your credit card debts can be a very smart financial move. However, you could be wondering how you can do so. These are some of your options.
Transfer to a Balance Transfer Credit Card
Some credit cards are actually designed to be used for a balance transfer, and many of them offer a zero-percent interest rate during the introductory period. Even if you aren’t able to qualify for one of these cards, you may be able to find one that has a much lower interest rate than some of your other credit cards. If you choose this option, you can slash the interest that you pay. If possible, it is smart to try to pay off your full balance before the introductory period is over. For best results, compare cards, and look for one that offers the lowest possible interest rate after the introductory period in case you aren’t able to pay off your full balance in time.
Take Out a Personal Loan
If you have good credit, you may be able to qualify for a low-interest personal loan that can be used to consolidate your debts. Many people talk to their personal bankers to find out about their options through their bank or credit union. There are some finance companies and other lenders out there that offer these types of loans, but be careful about interest rates, since some of them can be high.
Take Out a Home Equity Line of Credit
Are you a homeowner? Do you have equity in your home? If so, you may want to look into a home equity line of credit. Basically, this type of loan allows you to use your equity as collateral for a loan. In many cases, interest rates on these loans are low.
As you can see, if you are swimming in credit card debt, you do have options. Consider looking into these options so that you can get your credit card debts under control. This can provide you with peace of mind and can help you take the necessary steps to handle your credit card debt once and for all.