Consolidating debt into one payment
If you’re feeling weighed down by several credit card balances, credit card debt consolidation could provide some serious relief from your financial woes.Here’s how credit card consolidation works: You first decide if you want to take out a new loan, open a new credit card, or enroll in a debt management plan (more on that later).Promotional interest rates expire — like 12 months of a 0% APR on a balance transfer card — so make sure you can repay your debt within that time frame. Failing to pay a personal loan as agreed will hurt your credit, so stay on top of your loan payments and work to build up a solid payment history.No matter what credit card consolidation options you’re considering, be sure to ask about any fees you may have to pay and factor those numbers into your decision.Credit card consolidation can affect your credit in many ways, depending on which strategy you choose.
Credit cards may have a balance transfer fee, so you’ll want to make sure that cost doesn’t outweigh the potential benefit of getting a lower interest rate on your debt. Ask about any loan origination fees, and make sure the loan payment amount is something that easily fits into your budget.Some strategies will be more affordable than others, and your credit card consolidation choices may be limited by your credit standing.