How to Erase Credit Card Debt Through Credit Card Debt Consolidation

If you're making regular payments on your credit card debt but aren't seeing much progress because of high interest rates, consolidating your accounts may be one way to make a significant dent in your balance. You may also consider consolidating your credit card debt if you're trying to avoid bankruptcy. Depending on the method you use to consolidate your debts, you may be able to save money on interest and speed up your debt repayment.

Instructions

1

Make a list of all your credit card accounts, including the current balance, the interest rate, the minimum payment due and the amount you actually pay each month. You need to know exactly what you owe to determine if consolidating your debts will be beneficial and what method will work best. It may also be useful to use an online calculator to estimate how long it will take to repay your debts under the current terms.

2

Define your goals for consolidating your debt. Decide if you need to lower your payments to create more breathing room in your budget or if you want to try and save money by lowering your interest rate. Also, establish a specific time frame for getting your credit card debt paid off.

3

Go over your budget to determine how much you can afford to pay towards your debt each month. If you have trouble making your monthly minimum payments, consolidating your credit cards may not offer you a significant advantage.

4

Evaluate your options for consolidating your debt. You can combine your credit card debts by transferring them to a single card, taking out a home equity loan or line of credit or applying for an unsecured loan. Home equity loans or lines of credit typically offer much lower interest rates than credit cards. Generally, you need to have a good credit score to qualify for this type of consolidation, so you may want to check your credit report before speaking with your lender.

5

Research debt management programs if you don't qualify for a consolidation loan or a balance transfer. With a debt management program, your debts are combined into a single monthly payment, and in many cases, your interest rate is lowered and your fees are waived. Both non-profit and for-profit companies offer debt management services, and you may have to pay a fee for this type of consolidation.