Credit card debt consolidation: Your way out of credit card debt

Description: You can consolidate your high interest credit cards with a home equity loan or a balance transfer card and achieve debt freedom.

If your credit card debt is spiraling out of control, you can reduce your card payments by using a credit card debt consolidation service. Credit card debt consolidation can be an outstanding option to knock off your huge credit debt burden. If you’re thinking about this way to handle your high-interest credit cards, then you should ensure that you secure the best rates and terms available. Given below are two options that you can use to consolidate your credit cards and enjoy one affordable monthly payment:

Home equity loans

If you’re a homeowner and have built up a lot of equity in your home, then you can use your home equity as security or collateral and take out a home equity loan to consolidate your credit cards. These loans are available at low interest rates and the monthly payments are less than the aggregate of your credit card payments.

However, you should exercise caution while obtaining such a loan since you have the risk of losing your home in the event of a payment default. A helpful guideline is to stop using your credit cards altogether and close all the accounts so that you don’t get enticed to accumulate further debt.

Balance transfer 

This is one more way of consolidating your cards. You essentially apply for a card that comes with a reasonable introductory rate and switch all your card balances to that card and pay them off comfortably.

You must understand that this is a teaser rate and only available for a small period. This rate would get back to the usual rate as soon as the introductory period is over. Before it translates to the usual rate, try to pay off all your balances by transferring them.

Balance transfer as a method to consolidate your credit cards frequently necessitates additional costs like transaction fees. You should go through the small print to find out how much it would cost you to carry out the balance transfer. You mustn’t forget to make timely payments for your balance transfer card since late payments would frequently pull your interest rate up to the usual rate.

While using a balance transfer card to pay off your outstanding balances, you should discontinue all your cards so that you don’t pile up any more debt. If you can’t do this, you would get more and more into debt.         

With credit card debt consolidation, you can reduce your payments by as much as 57%. However, consolidation might not be the right choice for everyone. Prior to making a decision, you should practically consider the pros and cons to work out if this is the right solution for you.