How to Consolidate Credit Card Debt to Save

Credit card debt consolidation can save you hundreds, or even thousands of dollars in interest. Before seeking credit card debt help, or trying to settle credit card debt with your creditors, consider a credit card debt loan to consolidate your debt and save money.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Credit Card Debt
• An average credit score

1. Make a list of the credit card debt you want to consolidate. You need to know the total amount owed, so you will have an idea of how large of a credit card debt loan you need.

2. Apply for a 0% balance transfer offer. This should be your first step, because this is the safest credit card debt loan with the lowest rate that you can potentially use to consolidate credit card debt. These promotional offers usually offer either 0% or a low introductory rate for a period of time, usually six months to a year. You can then consolidate credit card debt on this new card, and have a lower interest rate.

3. Apply for a personal loan. If you are turned down for a balance transfer loan, your next best option for consolidating credit card debt is to apply for a personal loan. This will be a general personal loan from your bank or credit union. If they ask what it is for, you can tell them you are looking for a credit card debt loan. Fill out the paperwork and make sure you understand the terms and conditions of the loan. Once you have the loan money, pay off all of your credit card debt. You have now consolidated your credit card debt into one personal loan debt.

4. Apply for a home equity loan, or refinance your house. This should only be done if you have tried and failed to get a balance transfer and a personal loan. This type of loan is not designed to be a credit card debt loan. It allows you to "tap into" or borrow from the equity of your home. You can then use the money you borrowed to pay off all of your credit card debt, thereby consolidating credit card debt.

Tips & Warnings

• Balance transfer offers usually charge a fee when you transfer the balance. This can be as much as 3% of the total balanced transferred. Still, they allow you to consolidate credit card debt into one bill, and give you a lower monthly payment so they may be your best option. They also have the lowest interest rates and least risk of any of the credit card debt loans discussed above.
• Tapping into the equity of your home to consolidate credit card debt can be very risky. If you are unable to pay your credit card debt, creditors must sue you in court in order to recover their money and you usually cannot lose your home. However, if you are unable to pay a mortgage loan, you are in danger of having your home foreclosed on. Only use a mortgage to consolidate credit card debt if you are unable to get any other type of credit card debt loan and you are confident you can pay back the loan.

Resources

• Working with Credit Card Companies to Avoid Bankruptcy
• Negotiate Credit Card Debt For Less
• How to Make a Get Out of Debt plan

[tshved]

on 10/2/2009 Good advice.

[meeke]

on 9/21/2009 Very good suggestions. 5*

[patmcaudel]

on 9/21/2009 very good job. the big thing is not re using the cards you just paid off, so you don't have double the charges.

[hevvvyd]

on 9/21/2009 i think this is a GREAT article!!! ill recommend. 5 stars =]

[whiteshoulder]

on 9/21/2009 Very well written. Good advice and tips.