Information on My Debt Consolidation

Eliminating credit card debt and other outstanding loans may seem long and arduous. By means of debt consolidation, you can pay off your principal balances sooner. Debt consolidation doesn't eradicate debt. Instead, consolidation helps you acquire cheaper interest rates on debt. With cheaper rates, you can reduce the principal faster.

Debt Consolidation Loans

Acquiring a debt consolidation loan through your bank or credit union can result in a lower interest rate. For example purposes, your credit cards may charge an interest rate in the 20 percent range. However, a bank or credit union approving your debt consolidation loan may only charge a rate of 8 or 9 percent -- depending on your credit history. This lower rate can significantly reduce your monthly obligations; and because debt consolidation loans have fixed loan terms, you can pay off the balance within a few short years.

Credit Card Balance Transfer

Skip the application for a debt consolidation loan and apply for a low-interest credit card to transfer your balances. Balance transfers help with consolidation because these offers include lower interest rates and lower monthly payments. You can move all your credit card balances onto a single card, and only worry about one monthly bill. Depending on your credit history, you may qualify for an introductory 0 percent balance transfer offer. Thus, creditors apply your entire payment to the principal balance.

Home Equity Loans

Tap into your home's available equity and use this money to completely pay off your high interest credit cards and other loans. Home equity loans and lines of credit, or second mortgages, use your property as collateral. Lenders let you borrow up to a percentage of your home's equity -- usually 80 percent. Acquire funds in one lump sum, or ask your lender to set up a credit line and withdraw funds on an as-needed basis.

Debt and Credit Counseling

Understandably, not everyone fits the criteria for a debt consolidation loan, balance transfer or home equity loan. These options help people with good credit scores and those who own property. If you don't meet these requirements, or simply don't want to use these options, consider debt and credit counseling to help consolidate your debts. Rather than provide funds to pay off your debts, debt counseling combines your balances into one bill, and agencies work with creditors to help slash your interest rates.