You take a deep breath as you pull open the mailbox… then you see them; several more bills from credit card companies that you owe money to.
If credit card debt has you frightened to check the mail, you are not alone. Americans owe a combined total of over $1.04 trillion in credit card debt alone!
One way to help make your debt more manageable is to simplify your debt into one monthly bill. There are a few ways to merge your debts, but you should know your options before deciding which method is best for you.
To help, we created a quick guide about how to consolidate credit card debt. Keep reading to learn two of our favorite ways to help demolish credit card debt.
How to Consolidate Credit Card Debt with a Balance Transfer Card
If your credit card debt has gotten out of control, but you are not so far behind that your credit score has suffered, the best option for you might be to transfer your various debts to a different card.
That may sound crazy but think about the interest rates that increase your debt over time. How can that be a good way to consolidate debt?
Each credit card company has its own interest rate, which is almost always a high percentage. Some percentage rates are variable and will get higher over time, so the longer you owe them money, the more your debt will increase!
By getting a balance transfer card, you have an opportunity to get a better interest rate for your debt and some cards even offer a 0% APR for those will exceptional credit scores!
A word for the wise: If you are one of the lucky ones to qualify for little to no interest on your balance transfer card, do not use that card for new purchases. The point of this card is to get you out of debt, not to shuffle and grow your debt.
Debt Consolidation Loans
When your credit score has already suffered from the crippling debt, you may not qualify for a balance transfer card. But, you may still qualify for a debt consolidation loan.
The drawback is that the interest rate is often higher than the balance transfer cards. For 2019, the average interest rate for consolidation loans is 18.56%.
Since some cards (like store-specific credit cards) can have an APR as high as 24%, the rate offered by a consolidation loan could still be lower than your current rate. If you can get any fixed interest rate which is a lower percentage than your current credit card companies’ rates, then take the loan.
If you are planning on getting a loan to consolidate your debt, check out our page on personal installment loans.
Because Debt Free Is the Way to Be!
Now that you know the ins and outs about how to consolidate credit card debt with two different methods, you can decide which path is better for your personal situation.
Imagine how wonderful it will feel to no longer have the crushing weight of credit card debt looming over you. Keep that goal in mind as you put in the work to end your credit card debt.
If you have any questions about this article or consolidating credit card debt, we can help you figure it out! Contact us today to get started!