3 Ways to Consolidate Credit Card Debt

January 2nd, 2012 | Budget, credit cards, Debt, Guest Blogger, loans, Money, Personal Finance

Today's post is a guest blog by Nicole James of Debt Consolidation Care.

If you are overburdened with multiple credit card bills and want a solution, then credit card debt consolidation could be the answer that you are looking for. This process combines all your multiple credit card bills into a single monthly payment.

The three ways to consolidate credit card debt are as follows.

1. Consolidate credit card debt yourself: You can consolidate your debt yourself, for that you must follow the given steps.

a. Sum up all your debt: The first step that you must take to reduce credit card debt is to evaluate or rather sum up all your outstanding credit card debts that you have accumulated over the years. Consider this individually for all credit cards. Check the amount that you owe on a credit card and the rate of interest on that credit card.

b. Consider options to reduce the debt: After you have calculated how much you owe, you must then decide how to pay off your debt. The first option that you must consider is to find out if any of your credit card companies will offer any special on balance transfer. This implies that you may get a lower interest rate for a period of time, usually 6 months to 1 year, on balance transfers. In case that your credit card company does not provide this, you should look for a company that does.

2. Credit card debt consolidation loan: You may take a credit consolidation loan to pay off all your debts. The advantage of taking a credit consolidation loan is that, it has a very low rate of interest. Thus, you can pay off all your multiple creditors with the loan amount and then pay only the monthly installment to one creditor, that is, the bank from which you take the debt consolidation loan. You must know certain things about loan consolidation before you opt for it, they are as follows.

a. Interest rate: This should be one of the primary factors when it comes to choosing your credit consolidation loan. This is because, the higher the rate of interest, the more will be the amount you need to pay towards the loan.

b. Repayment period: Although, your monthly installments are reduced but consolidation loans increase your repayment period. So you go on paying for a very long period of time. Thus, you must compare between what the various banks are offering to find out which loan suits you the best.

3. Debt consolidation program: If your credit card bills are so many that you can’t handle them yourself, you can take the help of a debt consolidation company. This company assesses your financial position and decides on a particular monthly installment. You have to pay the monthly installment to the consolidation company and they distribute it among your creditors.

It is advisable that you plan a budget and try to save more every month regardless of whatever option you choose to consolidate your debts. It will help you manage your finances in a better way.

Photo Credits: B Rosen

Originally posted 2010-08-21 11:08:30. Republished by Blog Post Promoter

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