Want to consolidate credit card debt? If you are used to buy something with an installed repayment plan and you’re making the minimum payment each month you are never going to pay down your credit card debt. You are going to keep it where it is or it is going to go up and the only way out is to find ways to consolidate credit card debt.
Credit card debt consolidation can help you control the debt at an acceptable level. This gives you some time to change your spending habits so you no longer make the minimum payments and charge your credit cards up to the limit.
Here are some tips on how to consolidate credit cards and how to avoid starting the problem all over again.
Credit Card Debt Consolidation Options
There are many ways to consolidate your credit card debt. Depending on your overall financial status you can consolidate debt by transferring balance to a lower interest credit card, getting a home equity debt consolidation loan, enrolling a credit card debt consolidation program, or getting retirement funds.
Here is a brief comparison of each credit card debt consolidation option:
- Balance transfer credit card: In this method you will need to get a new credit card with a lower interest rate or a zero introductory interest rate. Once approved, you take out cash advance and use it to pay off your standing balance on your old credit cards. Basically what you do is consolidate all of your payable into one credit card, with only one rate to worry.
- Home equity loan: If you own a house, getting a loan from equity of your home is probably one of the easiest things to do. With the debt consolidation loan, you can benefit from tax deductions for the interest rate of the loan. You must be careful with this method however, since your house will serve as the collateral.
- Debt consolidation program: You may approach a credit counseling service and join their debt management program. The company can help you consolidate all your monthly payments into one single payment and then disperse this to the creditors on your behalf.
- Retirement plan loan: You can also use your retirement funds to consolidate credit card debt. Consolidating debts using retirement funds can be very tricky, though. This loan is not tax deductibles and there are problems when you fail to pay back the loan within five years or when you resign from work. Only use this if you have no option.
Choose the Best Way to Consolidate Credit Card Debt
Those are several options that are available for you if you want to consolidate your credit card debt. Which debt consolidation option is the right one for you?
You want to check your ability to repay debt and your current financial position to find the best option. It should be one that will make paying all your debt easier and save you money in the long run.
No matter how you consolidate credit card debt, you will need to change your spending habits. Learn from the experience of those who go through debt consolidation but get themselves back into the same problem all over again. These are people who just don’t learn from their own mistakes.