One of the best ways to reduce your credit card debt is to consolidate it under one payment. An understanding of some of the main ways to consolidate credit debt without having to use a consolidation service can help you to determine the best method for you.
Transfer to Another Card
If you read the fine print in the credit card transfer offers you get in the mail, you may notice that some of those offers list a 0 percent interest rate on transferred balances. It is a good way for you to consolidate your credit card debt, and lower your overall obligation. As long as the new credit card company gives you a credit limit that is sufficient to consolidate all of your debt, then you can transfer your high interest credit card debt to a 0 percent account. To make the situation ideal you can cut up the new card once it arrives and simply focus on paying off your consolidated credit debt at a significantly lower rate.
Personal Loans
Using a personal loan to consolidate your credit debt can help your credit rating, and lower your overall credit debt obligation. Secured loans and unsecured loans are two kinds of personal loans to consider. A secured loan is backed by your personal property known as collateral. Your bank will determine how much value your collateral needs to be to get the loan, and you must prove that your personal property is paid for before you can use it as collateral. An unsecured loan does not require any collateral, and is offered to people with good to excellent credit ratings. Be sure that your personal loan has an interest rate lower than any of the credit cards you are consolidating, and also make sure that your personal loan payment is less than the combined payments of your credit cards.
Home Equity
A home equity account is another option to use when consolidating credit. It is best to use a home equity loan rather than a home equity line of credit to consolidate debt because you can get a fixed rate on a home equity loan. The interest rate on a home equity line of credit is normally variable, and this may wind up costing you more than the individual credit accounts were costing you before consolidation.
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