The Best Way to Consolidate Credit Cards

When it comes to consolidating debt, the best way to do it is the way that fits your situation and makes your life easier. Many people turn to debt consolidation companies for help, but if you are more of a do-it-yourself kind of person, then there are several ways to consolidate debt that do not involve paying a monthly fee to a debt consolidation professional. You do not need to have perfect credit to qualify for some of the credit card consolidation options available.

Transfer Balance

One of the easier ways to consolidate your credit card debt is to transfer your debt to one credit card account. According to CreditCards.com you will want to pay attention to the balance transfer terms before committing to a transfer account. While many credit companies advertise a zero percent interest rate for transferred balances, there are usually rate increases after a pre-determined period of time. There are some very good transfer deals available, you just need to be sure to read all of the conditions of transfer balances before signing the agreement to make sure you are getting an interest rate that will help you to pay off all of your credit card debt without breaking your monthly budget.

Personal Loans

Secured and unsecured personal loans are ways that your lending institution can help you to consolidate your credit card debt at a much lower interest rate. Even if the best interest rate you qualify for in a personal loan is around 12 percent, that should still be better than the nearly 20 percent you are probably paying on your credit card debt now. A secured personal loan requires personal property in the form of collateral to be used to back up the value of the loan. If you have less than perfect credit, you may still qualify for a secured personal loan. An unsecured personal loan allows people with good credit to get better interest rates and payback terms without using collateral.

Home Equity

If you have equity in your home, then you may be able to use it to help consolidate your credit card debt. Discuss your home equity options with your financial institutions and see which one is right for you. A home equity line of credit is normally an adjustable rate product that can see its monthly payments and annual interest rate vary from year to year. A home equity loan can be a fixed-rate product that gets you the same payment and interest rate for the life of the loan.

Which is Best?

The best way to consolidate credit cards depends on your financial situation. Transferring balances to a single card is the easiest way, but your credit may be helped more by eliminating the presence of credit card accounts and using a personal loan or home equity loan to consolidate credit. Using a loan may be less damaging to your credit than adding another credit card. Discuss your options with a certified financial planner or a reputable debt counselor to see which option is right for you.