The Best Form of Credit Card Debt Consolidation
If you have too much credit card debt and you know it, you might consider credit card debt consolidation. This action is a way to combine your credit card debts from many different cards into one payment. You might get a personal loan, for example, and use that money to pay off the cards.
Then, you just have the one loan to pay off. You can reduce the total costs of your debt, get a lower interest rate, and simplify your debt payments all at the same time. But is a personal loan the best form of consolidation? That depends on the amount of debt you have, your goals, and what you can do. Here are a few things you might want to try in order to figure out what is best for your situation.
Make A List
The first thing you should do is sit down and take a hard look at your finances. You need to make a list of your credit cards and the balances they have on them. You should also list their interest rates and the monthly payments you have to make. Once you have a handle on how much debt there really is, you are closer to being able to make a decision.
You will also want to include a list of your assets because some loans might want to know about those or might use something you own as collateral. If you have equity in your home, note that. If you own a vehicle and don’t have debt on it, that’s another thing to list. You may also have retirement accounts or something of that sort to take note of on the list in case you need it.
Figure Out What You Can Afford
You know how much you make each month and how much your other bills are. How much can you easily afford to pay on your debt? If you are struggling to cover the credit cards now, a credit card debt consolidationmay be able to help you with that. But if you have too much debt, you might not be able to afford the payments even if you do consolidate. You need to know what you can afford before you move forward in any direction.
Check Out Your Credit Score
Knowing your credit score will help you to track your progress. It can also help you understand what options are going to be available to you. If you have poor credit, for example, you probably aren’t going to be able to get a bank loan–at least not one with good interest rates.
If that is the case, you might want to look into other financial lenders, perhaps that have unsecured loans, to help you get what you need to consolidate. It’s also good to know where your credit score is now so that whatever steps you take, you can watch to ensure that they have a positive impact on the score.
The best form of credit card debt consolidation is going to depend on your needs and your capabilities. If you can afford payments, consolidating the cards into one personal loan can be a great option. If that’s not affordable to you, there are other choices you will have to look into. Once you have a handle on what you owe and what you have, it’s easier to make a decision one way or the other.
The next step is to take advice from financial professionals to heart. You can lay out your lists to them and talk through the options. They will be able to tell you what choices are out there for credit card debt consolidationand what might work best for you, given your situation. Listen to their advice and take it seriously as it could impact your financial status in the future as you move toward a debt-free life.