Consolidating your credit card debt

11-Jul-2017 07:29

Some plans require you to become delinquent on your accounts in order to enter into the program.

Missing even one payment on an account will hurt your credit history and your credit scores.

Debt-consolidation companies offer alluring solutions, as they offer to do all the hard work.

They promise to roll up all your loans into one, replacing multiple loans with one low monthly payment.

But the truth is the debt is still there, as are the habits that caused it—you just moved it!

You can’t borrow your way out of debt in the same way you can’t get out of a hole by digging out the bottom.

Obtaining a new loan with a lower interest rate allows you to knock out older debt with higher interest rates and to potentially pay off your loan more quickly.

Methods of obtaining debt-consolidating loans offer varying levels of effectiveness, so it's important to shop around.

consolidating your credit card debt-30consolidating your credit card debt-36consolidating your credit card debt-24consolidating your credit card debt-56

Because there is no general industry consensus as to what the best options are, we have narrowed down your options.Generally, financial experts advise against debt-consolidation companies.They may offer a quick solution, but often they are costly and unnecessary.In other words, the good money habits for staying out of debt and building wealth aren’t there—their behavior hasn’t changed—so it’s extremely likely they will go right back into debt.If you are looking to buy a home but hold a large amount of credit card debt, it may make sense to consolidate your debt as part of your overall path to financial fitness.

Because there is no general industry consensus as to what the best options are, we have narrowed down your options.Generally, financial experts advise against debt-consolidation companies.They may offer a quick solution, but often they are costly and unnecessary.In other words, the good money habits for staying out of debt and building wealth aren’t there—their behavior hasn’t changed—so it’s extremely likely they will go right back into debt.If you are looking to buy a home but hold a large amount of credit card debt, it may make sense to consolidate your debt as part of your overall path to financial fitness.A better option may be to find a reputable non-profit credit counseling company near you that can enroll you in a debt management plan.