When you’re drowning in debt, getting out of it can seem like an impossible feat. You might get discouraged when looking at the size of your debt and think that you’ll never pay it off, but the truth is that there are many credit consolidation solutions available to help you work your way out of debt and become financially stable again. These seven credit consolidation solutions can help you get out of debt so you can have the future you’ve always wanted!
1: Find Your Credit Card Interest Rate
A credit card’s annual percentage rate (APR) is a universal measure of interest rates. For example, if you have a credit card with an APR of 18 percent, then you’ll pay 18 percent on any purchases made on that card. In other words, a $1,000 balance on your credit card will cost you $180 in interest over one year if you don’t pay it off. To get out of debt as quickly as possible and avoid paying high-interest rates, look for low-interest credit cards or find another method for managing your spending habits.
Here are some effective methods for lowering your debt:
- Balance transfer – The best way to lower your debt is by transferring balances from higher-interest credit cards onto a low-interest card or 0% APR introductory offer. Balance transfers can be tricky, though, so make sure you understand all of the terms before signing up for anything.
- Negotiate with creditors – If you’re already behind on payments, consider negotiating directly with creditors to work out more manageable payment plans that can help prevent future defaults.
- Set up automatic payments – One easy way to ensure you always pay your bills on time is by setting up automatic payments through your bank account. You won’t even need to think about it!
- Pay off highest-interest debts first – It may seem counterintuitive, but many financial experts recommend paying off smaller debts first because they tend to carry higher interest rates than larger ones. This strategy allows you to tackle larger debts at a faster pace while saving money on interest charges along the way.
- Consider consolidating loans – When you consolidate multiple loans into one loan, you only have to make one monthly payment instead of several. However, keep in mind that consolidation loans often come with their own set of fees and penalties.
- Stop using credit cards entirely – Some people decide to stop using their credit cards altogether once they’ve racked up thousands of dollars in debt. Although it’s not always practical, cutting up your plastic can save you hundreds or even thousands of dollars per year by eliminating late fees and interest charges.
2: Look At Your Payment History
When you apply for a credit consolidation solution, it’s important to make sure your payment history isn’t littered with late payments or defaulted loans. Some companies will check your payment history (usually three years back) and, if it doesn’t look great, they may charge you higher interest rates or refuse to help you at all. Getting out of debt is challenging enough without paying more than you need to. Credit score optimization should be a top priority when pursuing a credit consolidation plan; learning how credit card balance transfers can be an easy way to do just that.
3: Use A Debt Calculator
Before you can decide which credit consolidation solution works best for you, it’s important to understand exactly how much debt you have, what your interest rates are, and when your payments are due. A debt calculator is a great tool for doing just that. It can help identify if you have any high-interest loans or credit cards—those are easier to tackle first. There are also free debt calculators available online. This allows users to input as much information as they want about their loans, including details on monthly payments and interest rates.
4: Make A Budget
5: Balance Transfer Zero Percent Offers
6: Consider Getting A New Card
Here are some steps to take if you want to get out of debt fast:
1) Find out if you qualify for a balance transfer credit card.
2) Compare cards and choose one with an introductory 0% APR period.
3) Pay off as much as possible during your introductory period to avoid interest charges.
4) Transfer your balances from other cards onto your new 0% APR card while paying them down at least monthly until they’re paid in full.
5) After your introductory period ends, continue using your 0% APR card to pay off your remaining balances.
6) After all debts are paid off, keep using your card but make sure you never carry a balance again!
Paying off debt quickly is a great way to make sure that your finances are under control and that you’re on track for building wealth. If it’s been years since you’ve done a budget, or if you feel like your financial situation isn’t where it should be, it’s time to make some changes. The key is recognizing that taking control of your money means taking action—so what will you do?