Did you know the average American household has $8,398 in credit card debt?
If you’re also struggling with credit card debt and cannot keep up with the minimum payments, you came to the right place. Although credit card debt might seem impossible to pay off, you can do so by following a few steps.
Read on to learn how to consolidate credit card debt.
1. Transfer Your Balance
One of the most popular ways to pay down your credit card debt is by transferring your balance to a 0% APR credit card. If you have a credit card with a really high balance, it might seem impossible to pay it down due to the high-interest rates.
When you find yourself paying the minimum payments, and the balance doesn’t go down, it’s a good idea to consider a 0% APR credit card.
There are plenty of credit cards that offer an introductory APR of 0% for up to 18 months. Take this opportunity to transfer the high credit card balances and pay off your card interest-free.
However, most credit cards will still charge you 3% to 5% transfer the balance.
2. Home Equity
If you are a homeowner, you might be able to tap into your home equity to pay off your credit card debt.
When you have been paying your home for several years, you will build equity. A home equity line of credit allows you to borrow some of the equity you’ve built without selling your home.
If you have a sizeable amount of home equity, you can borrow it to pay off your credit card debt.
3. Personal Loan
Applying for a personal loan is another way to consolidate and pay off your credit card debt. When you obtain a personal loan, you can take the lump sum and pay off all of your credit cards.
Rather than paying multiple cards at a time, you will keep one payment. Although you will have to pay interest from the start, personal loans have a fixed interest rate and repayment terms.
Depending on how much you borrow, you will be paying your personal loan between three to five years.
While the interest you pay on a personal loan is lower than of a credit card, your credit score will determine how much you pay. You can expect to pay between 10% to 36% in interest on a personal loan.
If you have a low credit score, you can look into personal loans for bad credit that offer approval guaranteed.
4. Debt Management Plan
If you’ve been trying to pay off your credit card debt and don’t know where to start, you might benefit from a debt management plan.
There are plenty of debt counselors that specialize in getting people out of debt. Debt management counselors personalize plans and negotiate interest rates for you.
This is How to Consolidate Credit Card Debt
Now that you know how to consolidate credit card debt, it’s time you take steps to achieve financial freedom. There are various options available to you, such as a debt management plan, taking out a personal loan, tap into your home equity, or transferring the balances.
If you enjoyed this article and would like to read more financial tips, check out the rest of our blog.
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