You can easily get rid of credit card debt in several different ways. Debt consolidation loans are one way. You can also take out a home equity loan (or a cash-out refinance) from your mortgage lender, or you can open a new credit card and transfer the balances over.
The best debt consolidation solution is one that simplifies your financial life or lowers your cost of debt, or both.
If you are already struggling to make your debt payments or your credit cards are maxed out, you may not qualify for a zero percent credit card balance transfer offer. Bad credit debt consolidation loans are easily available from some lenders but they are very costly.
A great way to consolidate your debt, especially if you have a bad credit, is to enroll in a debt management program, which we’ll discuss in a moment.
When you finish paying off your credit cards with a consolidation loan, don’t be tempted to use the credit cards with their newly free credit limits. If you think you might, close the accounts. You may have heard that doing this could hurt your credit score, and it might. But you can recover it from credit score damage much more easily and quickly than you can recover from crushing debt.
If you are a careful money manager who fell into debt because of unusual circumstances and not because you spent more on your credit cards than you could afford to pay off each month, then leave the accounts open. Doing this will help your credit score, because the amount of revolving debt you have is a significant factor in your credit score. Just be sure to put the cards away. Do not use them while you pay down your debt consolidation loan.
Debt Management Plan
A company will manage all the plan and negotiate some cost reductions with your creditors, such as waived fees or a lower interest rate. You’ll make a single payment to the plan manager, who will distribute the funds to your creditors. While you are in the program, you won’t be able to use your credit cards or open new ones. The whole plan is designed to get you out of debt in three to five years, after which all of your accounts should be reported as paid-as-agreed.Tags: pay off credit card debt