The holidays are over, and it’s time to get back into shape – physically and financially. Tackling your credit card debt by consolidating is a great place to start.
What is credit card debt consolidation?
Credit card debt consolidation is a financial strategy that takes multiple credit card balances and combines them into one monthly payment. Consolidating your credit card debt is ideal if the new debt has a lower annual percentage rate than your current one. This can reduce interest costs, make your payments more manageable or shorten the payoff period.
Here are ways to consolidate credit card debt:
• Transfer your balance(s) to another low-rate credit card
• Consolidate debt with a personal loan or home equity loan
• Develop a debt management plan
Balance transfer to another credit card
This option transfers credit card debt to another credit card that charges no or lower interest for a promotional period. A good balance transfer card will not charge an annual fee, but many issuers charge a one-time balance transfer fee of 3% to 5% of the amount transferred. Check and see what type of fees your issuer charges to see if it makes sense to use this strategy.
Consolidate using a personal loan
Another way to pay down your credit cards is to use an unsecured personal loan from a financial institution to consolidate debt. Ideally, the loan will give you a lower APR on your debt. Some financial institutions will offer debt consolidation specials after the holidays. Reach out and ask your financial institution or visit their website.
Using your home equity
Because home equity loans and home equity lines of credit generally have low interest rates, they’re good for homeowners who could save money by refinancing their high-interest debts at a lower interest rate. Keep in mind, this isn’t the best choice for everyone. If you make late payments on a home equity loan, you could put your home at risk of foreclosure.
Develop a debt management plan
A debt management plan is designed for anyone with a desire to pay their debt back and become debt-free. This includes people who have several credit cards, make high-interest monthly minimum payments, and experience collection calls. (As a Nymeo member, you have access to GreenPath Financial Wellness which can help you develop a plan.)
Make your debt repayment easy
We have options to help lower your monthly payments, potentially reduce your interest rate, or simply pay less total interest on an existing loan. Click here to get started consolidating high-interest rate accounts into one manageable monthly payment.
Category: Credit Cards & Loans