This week we're happy to feature a guest post from DebtConsolidationUS.org. In this post we go in depth on how debt consolidation can be a great tool to reduce and manage your existing credit card debt:
Are you up to your neck in multiple credit card debts? If yes, you aren't alone buddy! A 2019 Nerdwallet study has revealed that the total credit card outstanding debt in our country stands at $1.04 trillion! And it has increased by more than 7% in the last year!
You can imagine how many people are affected by credit card debt! So, you don’t need to worry! Rather, you need to find an effective way to get rid of your credit card debts and live a debt-free life ahead!
By the way, do you know what is the worst part of credit card debts? The incessantly high Annual Percentage Rates (APRs)! Yes, you heard it right! As of February 2020, the average interest rate of credit cards is almost 21.21%. Maybe that’s why many people find it hard to pay off their credit card debts!
At this moment, what if you get a chance to consolidate your multiple credit card debts into a single monthly payment. And that too with a lower interest rate than you are currently paying! It might seem impossible to you. But trust me, buddy, it’s possible! And that’s widely known as debt consolidation! Here are some of the best possible ways to consolidate your multiple credit card debts and pay off your debts with ease! Let’s start!
Opt For A Balance Transfer Card
You can transfer your high-interest credit card bills by transferring them to a new credit card, preferably with a 0% APR. But before you opt for a balance transfer card, read the terms and conditions carefully! Well, most of the balance transfer cards have 0% APR for an introductory period. For example, the Citi Diamond Preferred Card has an introductory balance transfer period of 21 months. Whereas, in the case of Wells Fargo Platinum Card, the introductory period is of 18 months!
Once that period is over, you will have to pay balance transfer APRs ranging from about 14% to 26% (depends on your creditworthiness). So you should be careful while doing a balance transfer. If you can pay off your total outstanding balance amount within the introductory period, you can save a substantial amount of money. Always make sure to pay off your outstanding balance within the introductory period! If you fail to do so, you might end up trapped in more debts!
Take Out A Consolidation Loan
Opting for a personal loan from a bank or credit union can help you to consolidate your multiple credit bills into a single one. But you have to keep in mind that the new loan should have a much lower APR than that of your existing credit cards!
A 2019 Federal Reserve report shows that the average interest rate of personal loans is around 10.36%. So, you can save money on your interest payments. Besides, taking out a consolidation loan means you have to focus on your new loan only!
That means you won’t be overwhelmed with multiple credit card debts and their different APRs. You will just have to make a single payment every month to pay off your credit card debts. And that too at a reduced interest rate. However, in most cases, you need to have a decent credit score to take out a consolidation loan at lower interest rates! But some online creditors can offer you pre-qualified offers without doing a hard inquiry on your credit report.
Opt For A Debt Consolidation Program
Being trapped with credit card debts can make you stressed. And eventually, you might not find a way out from your debt trap. In that case, you can approach a genuine debt consolidation company! At first, they will assess your financial situation along with your debt amounts. Then they will try to negotiate with your creditors to reduce the high APRs of your credit cards. Once they agree, you can start making single payments to the consolidation company every month.
The company, in turn, will distribute the money among your creditors depending on debt amounts. That means you don’t need to remember different due dates of your multiple credit card debts. And you can pay off your debts at reduced interest rates as well. However, you need to pay a fee to the consolidation company for opting for their services.
But before approaching a consolidation company, always try to check whether or not it is genuine! For example, you can check out their reviews or ask your friends or family members if they know about it. So, the bottom line is debt consolidation can help you to pay off your credit cards with ease. And helps you to lead a debt-free life ahead. But in the meantime, make sure not to charge your credit cards for new purchases. And if you want to use credit cards in the future, please use them wisely. Otherwise, you might fall prey to the debt-trap once again!
Author Bio: I’m in the pursuit of an idyllic life. I’m a husband, father of three daughters, business coach, content creator and blogger. I interest myself in researching about financial topics and lifestyle subjects.