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How to Consolidate Credit Cards?

by Violet WillettSeptember 6, 2021
How to Consolidate Credit Cards?

If you're tired of juggling multiple credit card payments and looking for a way to simplify your financial situation, there are several ways to consolidate debt. Here's how it works: determine the method that will most benefit your needs considering what balance you want to be paid off at, current financial status, and level of available credit.

A Non-Profit Credit Counseling Organization

Credit counseling organizations can review your entire financial situation and work with you to create a plan. They give advice about credit issues, budgeting, money management, and debt management. 

Working with a credit counselor is important, but you should do your homework first. Check to make sure the company or individual has experience and credentials before signing up for their services.

0% APR Offers On Credit Card

Many credit cards offer a 0% APR introductory period on balance transfers for 12-18 months, which means no additional interest accrues. They often have 3%-5% transfer fees and range from one to two years of this deal.

Debt Management Plan

Rolling several debts into one monthly payment at a reduced interest rate, debt management plans are best for those struggling to pay off credit card debt but don't qualify for other options because of low credit score. Unlike some cards that affect your credit score, these plans won’t impact the number - so if bankruptcy is a worse option you can use this instead.

A Balance Transfer Credit Card

A balance transfer can help you move balances from one or more credit card accounts to a different card. With many cards, the introductory 0% APR on transfers is limited — so if your plan was to hold onto those transferred funds for as long as possible and avoid interest charges by paying off all other debt and living expenses first, it's important that you monitor when this promotional period ends

Take out a 401(k) loan

Our advice is to not take money out of your 401(k) unless you absolutely have to. Though getting a loan from the company that sponsors it can be less expensive than other kinds, ideally you would avoid this strategy for debt consolidation because there are drawbacks as well.

As much as possible try sticking with personal loans rather than taking out one against your own 401(k). Personal loans don't require any credit check so they won't affect your score and paying off debts will improve yours too

The rewards from your credit card can be amazing, but if you get too deep in debt it will negate all of the points and cashback. To gain financial freedom quickly without hurting yourself with interest rates that are high - talk to a professional about how to eliminate this debt within your means!

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