How to Consolidate Credit Card Debt: 5 Best Options
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Best way to consolidate credit card debt
1. Apply for a credit card consolidation loan
Pros
Fixed interest rate means your monthly payment won’t change.
Low APRs for good to excellent credit.
Direct payment to creditors offered by some lenders.
Cons
Hard to get a low rate with bad credit.
Some loans carry an origination fee.
2. Roll your debts onto a balance transfer credit card
Pros
0% introductory APR period.
A year or more to pay off debt without interest.
Cons
Requires good to excellent credit to qualify.
Usually carries a balance transfer fee.
Higher APR kicks in after the introductory period.
3. Enter a debt management plan
Pros
Fixed monthly payments.
May cut your interest rate by half.
Doesn't hurt your credit score.
Cons
Startup fees and monthly fees are common.
It may take three to five years to repay your debt.
4. Tap your home equity for a loan or line of credit
Pros
Typically lower interest rates than personal loans.
May not require good credit to qualify.
Long repayment period keeps payments lower.
Cons
You need equity in your home to qualify, and a home appraisal is usually required.
Secured with your home, which you can lose if you default.
5. Borrow from your 401(k)
Pros
Lower interest rates than unsecured loans.
No impact on your credit score.
Cons
Reduces your retirement fund.
Heavy penalty and fees if you can't repay.
If you lose or leave your job, you may have to quickly pay back your loan.
What is credit card consolidation?
How does credit card consolidation work?
Is it a good idea to consolidate credit card debt?
Can I still use my credit card after debt consolidation?
How can I consolidate credit card debt without hurting my credit?
How much does credit card debt consolidation save?
Article sources
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- Best way to consolidate credit card debt
- What is credit card consolidation?
- How does credit card consolidation work?
- Is it a good idea to consolidate credit card debt?
- Can I still use my credit card after debt consolidation?
- How can I consolidate credit card debt without hurting my credit?
- How much does credit card debt consolidation save?
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