Dealing with multiple credit card debts is daunting as it is. Not only do you have several payment deadlines and large repayment amounts to manage, you also face the risk of dealing with late charges and extra fees on a regular basis. Let’s not forget that credit cards carry high interest rates compared to other financing options, making it easier for you to accumulate large fees in no time.
For those struggling with their credit card debts, debt consolidation is an option worth considering. Rather than struggling to repay multiple loans, you will have one fixed repayment amount to deal with once the debts are consolidated. Before you go ahead and start searching for a consolidation loan to use, however, there are several important things to understand first.
If you are going to use debt consolidation as a solution, you want to list all of the credit card debts you are now dealing with; leave nothing behind. It is a big move to make and it is certainly a move you want to make to solve all of your problems.
While listing the debts you need to repay, be sure to include details such as the interest rate, the actual cost of the debt (including interest, admin fee, and other charges), the principal amount, and the due date each month.
The comprehensive list will act as your guide. When comparing consolidation loans or reviewing your options, for example, you can use the list of debts to see if you are saving money by consolidating your credit card bills.
Look for Balance Transfers
Another step you want to take before consolidating your credit card debts is searching for balance transfer deals. Credit card companies now offer balance transfer programs that let you move your credit card debt from one company to the other.
What’s great about these programs is the lower interest rate you get to enjoy. The introductory interest rate can be as low as 0% – yes, no interest to worry about – while the normal interest rate is usually lower than your existing credit cards.
You can transfer multiple credit cards using one balance transfer program as long as the new card’s limit allows you to combine multiple debts. Before you do, make sure the fees and additional charges don’t eat too much into the money you save on interest and regular fees.
Check Your Credit History
Before searching for consolidation loans, take the time to review your credit history. It may not be possible to improve your credit score in such a short amount of time, but you can still optimize your score by reviewing items in your credit history.
If there are inaccurate entries in your credit history, get them adjusted accordingly. Getting one debt you repaid a year ago removed from the credit history could lead to a substantial improvement in your credit score. Small inaccuracies are worth pursuing as well.
By reviewing your credit score and history, you are preparing yourself for the consolidation loan. Good credit score means low-interest consolidation loan, allowing you to save even more money in the long run. It is clearly a preparation worth making.
Compare Consolidation Loans
Next, make sure you compare the available consolidation loans and programs that can help you land the best deal thoroughly. The latter is worth exploring for two reasons. First, pre-designed programs are meant to help you be debt-free at the end of the term, so all you need to do is follow the program of your choice every step of the way.
The second reason is the vast network supporting popular debt consolidation programs. You will get the help you need as you negotiate the settlement of your credit card debts, find the right consolidation loan to use, and completely repay the consolidation loan in the desired time.
You can also choose to do everything yourself. Naturally, this will allow you to save more money in general, especially since you don’t need to pay fees to the program. You can still contact your credit card companies and negotiate better settlement deals yourself.
Stop Using Your Credit Cards
One last tip to keep in mind when you want to consolidate your credit card debts: close your consolidated credit cards immediately. Forget about using the cards for future purchases; this will only lead to more problems in the future.
In fact, you should stop using credit cards altogether. Keep one credit card with the lowest interest rate and fees for emergencies and get rid of everything else. Focus on repaying the consolidation loan as quickly as possible.
At the end of the process, you will regain control over your personal finance. Once you don’t have multiple credit card debts to repay, you can start saving more money, investing in more instruments, and generating additional income. You’ll be surprised by how quickly you can return to a healthy cash flow with your debts consolidated and managed properly.