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Find how to consolidate credit card bills and debt.

If you are asking, what is the best way to consolidate my credit card bills, here are some tips. There are many different approaches that you can take. Some can be done in partnership with lenders, and others can be done on your own. Learn how to consolidate credit card debts 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 any accrued debt. Depending on your personal financial situation as well as credit scores, any one of these options may be the best for you. Before you decide on any single approach to go with, you need to be sure to weigh both the pros and cons of all the various options. As there are numerous debt consolidation plans and you need to 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 as well as money on the length of your payment period. So there are many benefits to the approach. The goal is to use a method without risking your personal property or home.

Consolidate bills with a credit card balance transfer

Anyone who has fairly decent credit scores and if you currently use a credit card on a regular basis, then you are probably able to transfer the account. Most consumers with decent historical payment practices to their name 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 following term and conditions:

  • Offer period and how long it is for.
  • Transfer fee you may need to pay.
  • Interest rate that is set on any balance transferred.
  • Review the interest rate after the introductory period expires.

Most credit card balance transfer offers that you will encounter will include a fee of between 3-5% on the balance to be transfered. This can be significant. So be sure to look for either a credit card with no transfer fee, or one that has a maximum cost, such as a fixed dollar amount of $50-75. Those two tips can save you big money.





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 each balance you currently have at your current interest rate. So this means determine how much you will pay right now, before any attempt at consolidation is done. For example, if the the current credit card you use has fairly low interest rates on it, then the balance transfer fee you will need to pay may cost you more than the accrued interest if you can pay off the on your current card relatively quickly. So do the calculations.

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 money. This tends to be a trap that people fall in. When they try to consolidate their credit card bills it costs them more than the current interest rate in the long-term. So before you transfer any balance you need to consider the fees involved in any offer.

Sometimes consolidation can be combined with waiving a portion of the debt due. Or negotiations may be used as well. 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 reduce and negotiate interest rate credit card debt.

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. So think about worst case scenario. Say the interest rate jumps to as high as 20% after the introductory period ends. 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 monthly costs. As your future payments may be very high with those interest rate charges and a balance transfer will cost you much more money.





Refinance or take out a home equity loan

Another way to consolidate credit card bills and debts is by folding them into your home equity loan. Or families can take out a second mortgage or refinance their current home loan, or consolidate them into a line of credit. While not for everyone, this option to consolidate your debt has two big pros.

  • The interest you need to pay on a mortgage or home equity loan may be tax deductible, thus resulting in a tower income tax bill.
  • You will receive a much lower interest rate on your bills because the loan is backed by your home.

There are also some cons and risks:

  • Number one is if you can’t make the new payment on your loan, you could potentially lose your home.
  • You may need to pay more on your debt and accrued interest over time because the credit card balance is paid off over a longer term.
  • If you refinance using a home equity loan, you may also have to pay for closing cost and fees, which can be expensive. Learn more and find additional home equity refinancing methods.

Consolidate credit card debt with a personal loan

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. This is a major positive. In addition 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. Many lenders will not offer this form of financing for consolidating credit card debts. Also the lower your credit scores or rating, the higher the interest rate you will need to pay for the amount of money borrowed. 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 as well as other outstanding debts. 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. If you want to try this at all, but if you are frugal, you probably do not even need to consolidate.





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 the best form of consolidation for you. But just understand the risks in doing that.


By Jon McNamara

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