Being told to consolidate credit cards into one is very common advice offered to people in financial difficulty as they usually have multiple cards that form a large part of the problem. Quite simply this means gathering all your card debts together and putting it into one account with one monthly payment.
There are numerous methods to consolidate credit cards into one and no single method is right for everyone as circumstances vary greatly. This article is written as a guide to help you decide which method of consolidation is more suited to you.
Consolidate Credit Cards Into One - Method 1: Loan
Getting a loan to consolidate your cards can be a good option and will help preserve your credit score but it will only be beneficial if your new rate is lower than or equal to the current rates on your cards.
If you have equity in your home and don't mind the debt being secured against your house then you will probably get a better interest rate with a secured loan but watch out for extending the term too much and any fees involved and be sure that the payment is affordable as your home is at risk if you do not maintain payments.
Also if you consolidate credit cards into one with a loan then make sure to cut up the cards so you do not use them again and end up in a worse situation.
Consolidating Credit Cards Into One - Method 2: Debt Solution
A popular way to consolidate cards is to approach a professional credit counseling and solution company that can help you understand how to reduce bills and reduce debt. As well as going through your living expenditure and offering advice, they can usually look at two options which are debt settlement and debt management.
For those with a steady income, this is an ideal solution to consolidate credit cards into one involving no loans and avoiding bankruptcy. Basically they will both allow you to have one monthly payment that you can afford and they negotiate with the creditors to make an arrangement and in many cases the interest can be frozen or even some of the debt written off.
Consolidate Credit Cards Into One - Method 3: Bankruptcy
Only if you have exhausted all other options should you look at this as it is the most serious. If however you have high levels of debt and little to no monthly disposable income then this may be the only option to finally get you debt free.
This article is for informational purposes only and you should speak to a professional for individual tailored advice.
