How to Combine Debt Options

Consolidating debt saves money for many burdened with high interest payments and huge debt loads. It can be a method for reducing risk or a strategy to enable taking on even more debt. Credit counseling and debt consolidation companies offer specially tailored loans to combine multiple debts, but debtors have the option of creating their own consolidation plans by taking out personal loans or lines of credit at a lower interest rate than their other debts.

Instructions

1

Contact a non-profit credit counseling service using some of the links located in the resources section. These services offer free counseling and other debt-related services for a nominal fee. These organizations primarily offer advice and education tailored to your situation.

2

Determine your options for financing your high interest debt through conventional loans and lines of credit. Banks offer secured and unsecured personal loans to people with good credit at lower interest rates relative to credit cards. You can transfer the balance of your current credit cards to one with a lower introductory interest rate or one that offers bonuses for balance transfers. Home equity lines of credit and home equity loans can also offer relatively low interest rates to be used for credit consolidation.

3

Explain your credit situation to the lenders where you are trying to get loans from. Demonstrate how consolidating your credit will affect your budget and leave you with more spare income with which to pay back the consolidated loan.

4

Consider contacting a credit consolidation services. These are for-profit businesses chiefly interested in offering loans with fees attached to finance existing debts. They may also offer counseling services for a fee. Read all agreements with such businesses very carefully, as the fees can be high enough to make the consolidation loan uneconomical.