Different ways to consolidate your credit card debt

To consolidate your credit card debt means that you compress all your expenses into one payment. All the bills that you have will be managed in one single, easy payment. Even if you have multiple cards with different balances, consolidation of your credit card debt will make it easier to track down your debt. It will gather all your balances and put them into one general balance. We live in an era in which almost everyone has a card in his wallet. We use it either to receive our salary, for loans or just to have our savings kept in a safe place. A credit card can be useful to have because of the easy access to your funds and tracking of your expenses.

When it comes to the means of consolidating your credit card debt, you have a variety of possibilities:

  • Reaching out to debt consolidation loan companies
  • Making a personal loan.
  • Making a home equity loan.
  • Using a balance transfer credit card.
  • Making loans peer-to-peer.
  • Asking for help from family and friends.

Taking on a personal loan

Times are tough, and most of us could use a bit of help to manage our debts. One of the ways you could manage the consolidation of your credit card debt is to take a personal loan from your bank. It is usually an easy process that shouldn’t take too long to receive. Not the less, you will have to go through an inquiry.

The bank will look at your income, your monthly expenses, and the debt you have if that is the case. All of these are variables that determine the amount of money that the bank can offer you. Scoring high on them will bring you more money for the loan.

Credit card debt can be paid with a personal loan.
Ask a bank to help you consolidate your credit card debt.

You can ask multiple banks to make you an inquiry so that you have more offers and options from which to choose. A personal loan is easier to handle because it has a fixed interest rate. That means that you know exactly how much money you should give the bank each month. The fees are usually lower and there is a possibility that you can even pay off your loan before its term is due. The terms of paying off a personal loan are usually flexible and can be between 12 months and 5 years.

The downside of taking a personal loan can be the fact that you add expenses to your existing ones. That can be kept in order if you stop making payments on your credit cards and use the loan to cover the debts that you might have.

Using a home equity loan

If things get rough and you don’t have any way to turn, a home equity loan can get you out of trouble. It has a fixed interest also, but the risks are higher. You guarantee your house that the loan will be paid off on time.

Consolidating your credit card debt through a home equity loan can help you get rid of the debt you might have. You usually receive a smaller amount of money than for a personal loan, but that means a smaller, more manageable interest. The terms of home equity loans are usually 10 years and the fixed interest ensures that the expenses won’t grow over time.

Representation of a house and keys to a house.
A home equity loan can solve your problems with debt.

However, not being able to pay the home equity loan on time can cause foreclosure procedures on your house and you could lose it. The risks are high, but if you can manage your payments the right way, it can be a good solution. Try to make sure that you have the money to pay the monthly interest or even pay it in advance. Usually, there are no fees or penalties for paying your loan in advance, so if you can do it that way, you can ensure the house will remain your property.

Use a balance transfer credit card

Another option for consolidating your credit card debt is to use a balance transfer credit card. That means that you are making a new credit card that will take over the balance from another credit card or even more credit cards. Making such a card usually has a 0% annual percentage rate (APR) for your first balance transfer made within a certain time limit.

The balance transfer card can have fees for transfers that can be between 3% and 5%. Future fees can go up to 20% or higher if you exceed the time limit. However, if you manage to pay your debt on time, you avoid having to pay interest fees later. The usual time limit is 18 months, so if you choose to use a transfer credit card, keep that in mind.

Hand holding four debit and credit cards.
A transfer credit card is an option when you have to consolidate debt for more cards.

Being a good client or customer of a bank will help you obtain a transfer credit card easily. You can significantly improve your chances of receiving such a credit card if you have a good background. Making on-time payments and having a high credit score is what the banks are checking for. The only issue could be that banks don’t accept the 0% APR for balances transferred between cards issued by them.

About peer-to-peer loans

Peer-to-peer is a good option if you don’t want to get more involved with the bank to consolidate your credit card debt. Peer-to-peer loaning means that you get in touch with people that can loan you money (investors) without an intermediary.

The whole process usually takes place online. You apply for a loan, you make a personal financial profile and based on that, you receive offers. You can take on the offers or you can reject them. It is totally up to you. You can be offered different interest rates and full or partial coverage of the amount you want to loan.

The money you loaned has to be paid back monthly and some fees must be paid to the personal loan companies. Those fees usually cover the cost of processing your application for the loan and for paying funds.

Fees are calculated based on the amount you want to loan and the amount of time in which you can repay the loan. Investors can also take into consideration your credit scores, the reason for borrowing, and if you have a stable and solid income.

Asking family and friends for loans

The easiest way out of a bad money situation is to ask for help from your close ones. The less risky way to consolidate your credit card debt is to ask family or friends for a loan to cover your debt. It’s not easy when you have money problems, but many of us can be in that situation.

Talking openly about financial issues can be hard, but family and friends should be the first choice. Even if they can’t help you with the whole amount, maybe there is a possibility that they can help with other expenses. Borrowing from people you know implies flexibility when it comes to interest rates and the extent of time you have to pay back.

Taking money from someone you know to pay your credit card debt.
Family is always a good choice when you need help to pay your debt.

Having a very low or no interest rate and being able to repay it in your own time is a great way to start fixing your financial problems. When asking for money from people you know, you should agree on terms that would benefit both parties. If you settle for a monthly payment, always try to make it on time and keep track of your progress.

Having to borrow money from family or friends can put a strain on your relationship. Sticking to your agreement and talking openly about any issues that may pop up will help you maintain a healthy relationship.

Start consolidating your credit card debts today!

There is always a solution to your money problems. The most important thing is to know which one to pick. Analyze your situation thoroughly and choose whatever meets your needs and possibilities. For any additional information or recommendation, you have Consumer Opinion Guide and the detailed research of our team at your disposal.

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