Want to reduce what you’re paying in interest while still repaying your credit card debt? Consider consolidating your credit cards.
Credit cards, while convenient, make it easy to get into debt. If you have debt across multiple credit cards that you’re repaying, you may be able to reduce the interest and fees you’re paying by consolidating them into one account. There are a few ways you can do this, including a balance transfer, a debt consolidation loan, a personal loan or a peer-to-peer loan. You can learn more about your options in the guide below and decide which one is right for you.
Personal loans that could help you consolidate
Personal loan lender matching services
These matching services connect consumers with personal loan lenders. It is important to note that these services do not make credit decisions and they are not lenders, loan brokers or agents for any lender or loan broker. They can help link you up with a lender that might be able to help you access a loan.
How does credit card debt consolidation work?
This depends on the consolidation method you opt for, and it starts with you finding out which method is right for you. Once you’ve done that, you put all of your card balances into the one account. Make sure to close your previous accounts to save yourself from paying additional fees and to keep your credit utilization below 30% (read our FAQs below for more information).
What are your options?
- Credit card balance transfer. Card providers usually offer 0% APR for a limited period of time, allowing you to pay off your debt. Keep in mind the card isn’t necessarily free, with purchase APR and annual fees to consider.
- Debt consolidation personal loan. You can take out a larger personal loan and pay off your credit card balances using the funds. Some lenders also give you the option of paying your creditors directly rather than you having to divvy up the funds yourself.
- Peer-to-peer loans. Also referred to as P2P loans, these are becoming a popular choice for people looking to pay off their credit cards. Apply for a loan online and it will be funded by one or a few “peer” investors.
- Debt consolidation companies. These companies work by negotiating with your credit card providers to reduce your interest rate or lower your monthly repayments. You make a single payment, and the debt consolidation company will distribute the payment across your card accounts.
“How can I decide which is the best consolidation method for me?”
- What’s your credit score? Whether or not you have good credit will affect the interest rate you’re offered by lenders as well as your chances of being approved. Make sure the rate you are given will save you money when you consolidate your credit card debt.
- How much debt do you have? The amount of debt you have may affect the credit you can apply for. Check the allowable limits on different accounts before you apply to ensure you can consolidate all of your debt. Other lenders may not be willing to take on your debt if it is too large, so take this into consideration as well.
- Do you want fixed repayments or would you prefer flexibility? Different consolidation methods offer different ways to repay. For example, if you opt for a P2P loan, your payments will be fixed, whereas you can make variable payments and pay off more than you owe with a credit card.
NetCredit Personal Loans
NetCredit offer you the chance to borrow money as alternative to bank personal loans. As you borrow more your credit score increases and your interest rate becomes lower.
- Min. Loan Amount: $1,000
- Loan Term: Varies upon State
- Turnaround Time: 1 business day
- Total Costs: Depends on your credit score.
- Build your credit score - Must be 21+
- No security needed
- Confidential and secure!
When should you not consolidate your credit card debt?
There are a few instances when credit card consolidation may not be the right choice to pay down your debt. You may want to reconsider if:
- The new APR is higher than your current APR. This is a red flag and would have you paying more debt.
- It will hurt your credit score. Taking on more debt will generally damage your credit, although this should only last a short time. If you enlist the help of a debt consolidation company, you may notice your credit score suffer, so only consider this option if you already have bad credit or have considered other options.
- You haven’t checked the reputability of the debt consolidation company. Disreputable companies operate in the debt space, so it’s important for you to ensure you work with a company who works towards your best interest.
- Fewer accounts to worry about. By rolling several different payments into one, you should be able to manage your repayments easier.
- Doesn’t hurt your credit score. By consolidating your debts, you’re still only making payments on what you owe. You’re not increasing your limit.
- Relief from high APRs. If you have two credit cards at 20% APR or more you’re rolling these into a smaller APR loan.
- Getting into debt to pay for debt. Getting new debt to manage old debt can be risky if you are not prepared with a plan to pay it back.
- Secured loans may mean more risk. If you suffer a financial setback, you have your collateral to lose.
- Longer term debt. If you’ve consolidated your old credit card debt it is usually rolled into a longer term loan. You’re monthly repayments could be lower, but the interest paid over time could be higher.