5 Ways to Consolidate Credit Card Debt

If your new debt has an APR lower than your credit cards, consolidating credit card debt might be a good option.

If your new debt has an APR lower than your credit cards, consolidating credit card debt might be a good option.

These are the top five ways to get rid of credit card debt.

Refinance using a balance transfer creditcard

Consolidate your personal loan with it.

Tap home equity.

Take a look at 401(k), savings.

Start a debt management plan.

1. Transfer card for balance

Pros:

0% initial APR period

Cons:

To qualify, you must have good credit.

Usually, there is a transfer fee for the balance.

After the initial period, the APR will increase.

This option, also known as credit card refinancing is a way to transfer credit card debt to a Balance Transfer creditcard that does not charge interest for a promotional period of 12 to 18 monthly. To qualify for most balance transfer cards, you will need to have good to excellent credit (690 on the FICO scale).

An excellent balance transfer card won’t charge an annual fee. However, many issuers charge a one time balance transfer fee of between 3% and 5% of the amount transferred. Consider whether the interest savings you make over the life of the card will offset the expense.

Your goal is to repay your entire balance before the 0% intro APR ends. The regular credit card interest rate will apply to any balance remaining after the 0% intro APR period.

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