What Is the Best Way to Consolidate Credit Card Debt?

According to Experian, Americans have an average of four credit cards. While four credit cards isn’t necessarily a problem, it can lead to trouble if used irresponsibly.

The issue with having high balances on too many credit cards is that it takes a herculean effort to pay them off. You deal with different due dates, interest rates, and terms. It’s harder to pay off four credit cards than it is to pay off one – even if the total balances are the same.

That’s why many people choose to consolidate credit. But what’s the best way to consolidate credit card debt? Keep reading to learn more.

Consolidate Debt With a Personal Loan

Personal loans are popular ways to consolidate credit card debt. Why? Because they usually come with the best terms.

When you consolidate with a personal loan or credit card consolidation loan, you get a fixed interest rate and stable monthly payment. Nothing changes month-to-month, and you make one payment until you complete the term of the loan.

While personal loans tend to be the best way to consolidate credit card debt, it can be tricky. If your high credit balances led to poor credit, it’s hard to get a loan. Plus, you may have an origination fee.

However, it is always worth talking to your bank or credit union about this option.

Combine Credit Cards into One Low-Rate Card

Rolling multiple credit cards into one is known as a credit card refinance. A credit card refinance is your second-best choice for managing credit card debt.

The joy of a credit card refinance is that you often get an introductory period of 0% APR. It gives you a chance to pay off a chunk of your debt without paying interest on the total balance. Every payment goes straight to the principal during your 0% APR period.

However, these cards come with a catch. You will need to pay it off quickly, but a higher APR usually comes in at 12 months. What’s more, you may also pay balance transfer and annual fees.

As with personal loans, you have the most and best options when you have good or excellent credit.

If you have high balances and decent credit, you may get balance transfer offers in the mail. Don’t take the first card you qualify for. Compare all your offers to weigh the pros and cons. You don’t want to find yourself paying off a card with a higher interest rate than you had before.

What’s the Best Way to Consolidate Credit Card Debt?

So, what’s the best way to consolidate credit card debt? The answer is: it depends.

The best option for you depends on your credit score, the amount of debt you have, and what options are available to you. Whatever you do, you should compare your options and choose the most advantageous one.

If you’re not sure what to do next, consider getting in touch with a credit counselor at a non-profit agency. Some services are free, and they can help you come up with a strategic plan to get out of debt and stay that way.

Did you learn something new in this article? Visit the finance archive for more great money management tips.