Credit cards often carry high interest rates and unpaid balances on your cards can burn a hole in your wallet month after month. Debt consolidation is a popular method of dealing with the situation and paying off outstanding credit card debt.
To begin consolidating your credit card debt, assess all the debt you have run up on your various cards. Each card may have a different rate of interest payable on the outstanding amount. Put these together and calculate the average interest rate that you are paying on them. Any consolidation program you choose should come at a lower rate than this. Of course, you need not consolidate the debts on cards with a lower interest rate than what you’ll get on the consolidated loan.
You can now explore the market for low interest loans. If you have any high value assets in which you have sufficient paid up equity, like your home, then use these as collateral. Remember that collateralized loans are usually cheaper.
You can even hire professional help in finding the right kind of loans. A professional will have a good idea about the various loan products available in the market and he may speed up your search for the best loan. Calculate the total costs you will incur in engaging a debt professional and compare them with what you will save after the consolidation to determine if it is worthwhile.
Finally, stick to your debt consolidation program and make payments on time without fail. To stay out of credit card debt in the future, do away with some of your cards and keep only one or two cards for emergencies.
