If you are asking, what is the best way to and how do I consolidate my credit card bills, here are some tips for how to consolidate as well as the pros and cons of each option. The fact is that are several different ways to consolidate your credit card bills and debt. Depending on your personal financial situation or credit scores, any one of these options may be the best for you. Before you decide on any single method to go with, you need to be sure to weigh both the pros and cons of all the various debt consolidation plans and understand the implications of each method. Always keep in mind that the goal of credit card consolidation is to allow you to pay off your debts faster, save money on the interest you pay, and to also save time and money on the length of your payment period, all without risking your personal property or home.
Anyone who has fairly decent credit scores and if you currently use a credit card on a regular basis, then you more than likely receive countless credit card balance transfer offers every month. Although these balance transfer offers can be tempting to use, always be sure to read the fine print carefully before selecting one. Look for the:
Most credit card balance transfer offers that you will encounter will include a transfer fee of between 3-5%. Be sure to look for either a credit card with no transfer fee, or one that has a maximum transfer fee, such as a fixed dollar amount of $50-75. Before you go ahead and transfer any credit card balances, be sure to calculate how long it would take to accrue that much interest on a transfer fee on each balance you currently have at your current interest rate. For example, if the the current credit card you use has fairly low interest rates, then the balance transfer fee you will need to pay may cost you more than the accrued interest if you can pay off the credit card debt on your current card relatively quickly. Also, if the balance transfer interest rate isn’t 0%, even a somewhat low interest rate plus any balance transfer fees could cost you much more than you current interest rate in the long-term. So before you transfer any balance you need to consider the fees involved in any offer.
Some people are having success in calling the credit card company, such as Bank of America and Capital One, and asking them to waive some fees on a balance transfer. Find other ways to negotiate credit card debt. More.
It is very important to look at the interest rate after the offer period expires, as this can be a con to consolidating your bills using this method. Say the interest rate jumps to as high as 20%. It is critical to be honest with yourself, as if you can’t pay off the transferred balance before that low interest rate term ends, then you could get hit with those very high interest rate charges and a balance transfer will cost you much more money.
Another way to consolidate credit card bills and debts is by folding them into your home equity loan, take out a second mortgage or refinance your current home loan, or consolidate them into a line of credit. This option to consolidate your debt has two big pros.
There are also some cons and risks:
There are periods in which you may receive numerous offers for personal loans, and these loans can also help you consolidate bills. A pro is that personal loans are not backed by any collateral, such as your home, so therefore you don’t risk any personal property ad you don’t risk losing your home when you take out this type of loan to consolidate your bills, However you still do need to be careful. Often the offer for the personal loan includes a fairly low interest rate, but a con is that usually you need to have excellent credit in order to qualify. The lower your credit scores or rating, the higher the interest rate you will need to pay. As with any option you decide on, carefully review the terms and fine print before you accept an offer for a personal loan.
As always, the best option for you may very well depend on the total amount of your credit card bills and outstanding debt. If you could pay off a bill within a year just by being frugal, then a balance transfer or personal loan is usually the best option. On the other hand, if you have a large credit card balance but are determined to make a fresh start with your financial condition, then a home equity loan or refinance may be best for you.
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