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Credit Card Consolidation Options

One of the most challenging areas of life is managing your debt. It is essential to take care of your credit to be financially stable and avoid long-term financial problems. Credit card consolidation is a helpful tool to manage credit card debts in multiple places.

Who needs a credit card consolidation?

Credit card consolidation option is attractive to people who have many credit cards and cannot continue to pay their high monthly payments. These loans are distributed against any security and are way cheaper than unsecured loans. You can also make use of consolidation loans to settle all your loan debts. Consolidation loans are secured, so financial institutions maintain a low margin rate and also offer installment payments.

To help you determine if credit card consolidation is right for you, here are four options to consider.

  1. Cash-Out Auto Refinance: A few lenders propose these auto loans that enable you to make use of the equity in your car to give you a loan for other uses, such as credit card debt consolidation. But if you cannot make your payments, you would be at risk of losing your vehicle.
  2. Personal Loan: This option is suitable for individuals with no assets and good to excellent credit scores. If you have had a rough financial past, you may or may not be eligible for a rate that is corresponding to the current rate on your credit cards. Even though it is not made solely for paying off credit card debt, you can still use it to consolidate your credit card debts.
  3. Home equity loan: This allows you to have access to loans against your home’s equity and utilize the funds to pay almost everything you need. A home equity loan is a secured debt which is useful for people with low credit scores, assets, high credit card debt, and so on. But if you fail to make payments, the lender is entitled to start taking possession of your property, which can put you at risk of losing your home.
  4. Credit card balance transfer: A balance transfer allows you to move balances from one credit card account to another card. The credit card you transfer your debts to will typically have a low introductory rate. So, you can save money on interest and fees if you pay it off quickly. When this introductory rate ends, however, even a smaller balance would give rise to increased interest payments.

Handling credit card debt is often not a simple task. Think carefully before choosing your solution. After weighing your options, it is always better to choose a plan that will reduce your stress and monthly bills while helping you plan for long-term financial success. It might be a good idea to consult a credit counselor for professional guidance and advice, especially if you have no experience with credit card consolidation.


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