Do you have more than one credit card balance? Are you finding it difficult to manage the debt? Are you concerned about the impact it’s having on your financial health as a whole?
If you have multiple credit card balances, there are many ways to tackle them. Debt consolidation is a strategy to consider. This allows you to bring all of your balances under the same roof, which provides benefits such as:
- More efficient management
- Save money on interest
- Zero percent introductory rate (if you choose a balance transfer credit card)
Here’s the question you need to answer: what’s the best way to consolidate debt based on your current financial circumstances?
Generally speaking, there are two options available to you:
Balance Transfer Credit Card
A balance transfer credit card is exactly what it sounds like. With this, you transfer balances from multiple credit cards to a single credit card. What you’re left with is one balance that’s easier to manage.
Perhaps the biggest benefit of a balance transfer credit card is the zero percent introductory rate. With this, you don’t pay any interest on your balance for a predetermined number of months, such as 12 or 18.
On the flip side, most balance transfer credit cards have a fee. Plan for roughly three percent of the amount you’re transferring.
Debt Consolidation Loan
This is another form of debt consolidation. Rather than use a credit card, you take out a bank loan and then use it to pay off your balances.
For instance, you could apply for a personal loan. Once you have the funds, pay off your credit card balances, as well as any other debts that you can afford.
This leaves you with one big loan, one monthly payment, and one interest charge.
While there’s no fee, you won’t gain access to a zero percent interest rate.
When to Consolidate Credit Card Debt
There’s no right or wrong answer to this question. It depends on factors such as how many balances you have, the amount of each balance, and your ability to manage your current situation.
If nothing else, you can learn more about the process of consolidating credit card debt. Even if you don’t proceed right now, the information you gather can be helpful in the future.
Debt consolidation is one of the best ways to tackle credit card balances. One of the two options noted above could be just what you need to get this part of your finances back on track.
Have you ever used a debt consolidation loan? How about a balance transfer credit card? Were you satisfied with the results?