How to Cut Fees for Debt Consolidation

Manageable debt can easily spiral out of control when a person or family experiences a significant medical issue, layoff or other personal emergency. Overwhelming debt can leave debtors paying minimum balances, never getting ahead because of high interest rates and fees. Debt consolidation's goal is paying off existing debt under a new program that ideally has lower rates. Reducing fees as much as possible allows debtors to pay off bills sooner and move into a state of financial health quicker.

Instructions

1

Review your assets, debts and credit before making any decisions. If your debt is high but your credit is still relatively good, you should be able to shop around for the best consolidation solution.

2

Apply for a zero interest credit card if you qualify. Many cards lure new customers over by taking balance transfers with zero interest for six to 12 months. Make sure you close other credit card accounts once the balance transfers and make regular payments. If you are late or miss a payment, you may be surprised that a very high interest rate kicks in.

3

Transfer to a new zero interest credit card before your previous card's introductory time expires to maintain the zero percent interest while paying off old debt. Keep in mind that applying for more credit while you have a high outstanding debt balance has a negative affect on credit scores. This may affect your ability to get a new card, but if you qualify, it has the greatest impact on reducing fees and paying down debt.

4

Use equity in your home take out a home equity loan, paying the debts off with the loan proceeds and possibly getting a tax deduction in the process. Look for the best rate for an equity line of credit. Keep in mind that you will not get a zero interest rate and rates vary based on market conditions but are often lower than credit card debts.

5

Refinance your house to include a second mortgage that pays off certain debts such as home repairs. While there may be fees to refinance, your overall monthly payment may go down with a lower interest rate. You should be able to lock in mortgage rates as well to reduce the risk of market variability.