How to Use Credit Card Debt Consolidation

Credit card debt consolidation is something you can do to lessen the stress of high interest credit payments. There is a right and a wrong way, however, to consolidate your debt. This article will help you choose the right type of credit card debt consolidation for your particular situation.

Difficulty: Moderate

Instructions

1. Stay away from credit card debt consolidation companies. If you want to consolidate your credit card debt, do it yourself. Don't use a company with shady, and sometimes illegal practices. Many, if not most debt consolidation companies are bad news.

2. Add up all your high interest credit card debt. You can't do any credit card debt consolidation without first knowing exactly how much you own. You need to look your number straight in the face.

3. Apply for a personal loan at your bank. This credit card debt consolidation option is for those that do not own a house. This way you can combine your debt into one loan with a lower interest rate. Not only will this shorten the amount of time you pay off your credit card debt, typically the amount you pay is lower as well.

4. Choose a cash out refinance if you own your home and your current mortgage rate is higher than the refinance rate. This allows you to free up some cash for credit card debt consolidation, while also obtaining a lower interest rate.

5. Apply for a home equity loan for credit card debt consolidation if you currently have a low interest mortgage. Mortgage rates are typically much, much lower than credit card rates.

Tips & Warnings

• If you take a loan out on your house, make sure you realize that you are using your house as collateral for your debt consolidation.
• Don't let yourself get into the same credit card debt years down the road. When you use credit card debt consolidation, cut up your cards so you won't be tempted to spend again.

[vernk]

on 7/2/2009 yes, change your habits otherwise you have more debt than before! good info!

[Melanierose]

on 8/7/2008 Good article, I agree with WriterGig: "You can lose your home this way, so play it safe! The best idea is to break the cycle of debt as quickly as possible."

[klnygaard]

on 8/6/2008 great article. Another idea is to open a home equity line of credit instead of loan--it allows you flexibility to take out more at another time if you need it

[Psalmist4M]

on 8/6/2008 Great tips, thanks for the confirmations about considering debt consolidation companies. 5*s christianwomenconnect.com

[HowardBThiname]

on 8/6/2008 Great information. Thanks for sharing.