How to Consolidate Credit Card Debt That Is Under 10,000 Dollars

Debt consolidation can help people combine multiple credit card bills into one lower monthly payment whether they have $10,000 of debt or $2,000. Consumers often look to consolidation companies when choosing to combine debts, but there are other consolidation options to consider before signing with a consolidation agency. Finding the right company or process to consolidate credit card debt should only be undertaken after carefully considering the benefits, costs and risks involved.

Instructions

1

Look into nonprofit credit counseling with a debt management plan. Many individuals shy away from credit counseling, but it's often the most cost-effective way to get out of debt and prevent future financial problems. Many credit counseling agencies will help individuals with bill collectors, organize a better payment plan with creditors and may even speak with credit card issuers about lowering the total amount owed. The National Foundation of Credit Counseling is a network of nonprofit agencies that help individuals take control of their finances.

2

Find out if your local bank will extend a consolidation loan. It's not generally advertised, but banks can offer secured or unsecured loans specifically used to consolidate outstanding debt. Banks are more apt to offer an unsecured loan for debts under $10,000 than larger amounts. Banks usually offer better interest rates and fees than consolidation loan companies. If your credit is less than perfect, let the bank know exactly what you want the money for and that you're willing to put a clause in the loan agreement stating that you will use the money to pay off certain debts. Some banks will even make the payment for you to ensure the money is used for debt repayment.

3

Shop around with numerous consolidation agencies before deciding on one. Like most businesses, consolidation companies are there to make a profit, and they make money by charging for consolidation services. Ask plenty of questions and double check the finances to make sure you're paying significantly smaller payments each month than you were with the credit card debt. Make sure the company you choose offers credit counseling or advice in addition to debt consolidation.

4

Avoid consolidation companies that won't disclose the exact totals and timeframes required to pay off the debt. Find out if the consolidation company will be paying off your credit card debt in one lump sum via a loan or making monthly payments based on what you pay. To protect your credit rating, don't stop making credit card payments until you've verified that a consolidation company has started paying them.