The Best Way to Consolidate Bills

Whether you have a spending problem or financial hardships, it's easy to fall into debt. Unfortunately, getting out of debt isn't as simple, and you may spend a lot of nights lying in bed wondering how to pay off your creditors. Yet, there are ways to eliminate debt. Debt consolidation has helped millions pay off their debts and boost a low credit score.

Instructions

1

Refinance your mortgage loan. If you own a home and you have substantial equity in your home, consider a mortgage refinance. A refinance lets you apply for a new home loan. In turn, you can obtain a lower interest rate, better loan terms or take a cash-out option. The cash from a refinance can be used to consolidate debts. The borrowed money is wrapped into the new mortgage balance.

2

Get a home equity loan. Home equity loans and home equity lines of credit have lower rates than credit cards. Thus, you can apply for such loans and use the money to pay off your creditors. Because your home secures the loan or line of credit, you can get approved with less than perfect credit. Before applying for a loan, assess your finances and make sure you can afford a new monthly expense.

3

Apply for a secured personal loan. If you don't own a home and you want to consolidate your bills, talk with a bank to inquire about secured personal loans. You'll need a good credit history and collateral. Collateral can include a vehicle title, boat title, jewelry or electronics.

4

Transfer credit card balance to a low-rate card. Applying for a credit card that offers a low rate is another way to consolidate bills. Credit card companies regularly offer low introductory rates, in which you can pay 1 or 2 percent for six months or one year. Transferring your balances from a high rate to a low-rate credit card lets you save money and pay off the card quicker.

5

Call a debt consolidation agency. If you don't qualify for a refinance, home equity loan, personal loan or credit card, a debt consolidation agency can help. They'll contact your creditors to set up a new payment arrangement. In addition, agencies can negotiate better rates and terms, which lets you pay off debts within a set time period. Look for a non-profit debt consolidation agency because they don't charge a fee.