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If you have excessive credit card debt and are having a hard time paying it down or even making the minimum payments, it may be time to consolidate. There are several ways to consolidate credit card debt, and the best solution depends on your individual circumstances as well as the amount of debt owed.

Personal Loan

A personal loan is a good option if you have a high amount of debt and a decent credit score. If you have a low credit score or a low amount of debt, this option may not save you much money. Also, it is better if you have high interest rates on your credit cards. A personal loan is usually the best option for financing an amount of $10,000 or above.

Be sure to compare the loan’s fees and interest rate to your credit card interest rates. If you have a poorer credit score now and have interest rates in the teens on your credit cards, it may be better to keep paying them directly. Some loans come with considerable fees, and if you simply pay a little more each month toward your credit cards, you could wind up paying them off for about the same. Avoid using a payday loan or another high-interest product that is meant for emergencies.

Another consideration is self-control. If you have a spending problem, it may be good to cancel or freeze your credit cards until you pay off the consolidation loan. Many people get themselves in trouble when they pay off their credit card debts and then have a zero balance tempting them to spend more. Spending more while still paying off the consolidation loan may create a pool of debt that could lead to bankruptcy.

No-interest Balance Transfer

If you carry lower balances on your credit cards or only have two or three of them, a balance transfer may be a better option for you than a personal loan. Also, this is a good option if your credit score is not good enough to get an ideal loan rate but is still high enough to qualify for a new card. Many credit card providers offer introductory periods of six to 18 months of no interest when you sign up.

Look to see if the company imposes a balance transfer fee. The ideal card will offer a longer no-interest period and no balance transfer fees. Some companies may charge about three percent, which is normal. However, keep in mind that this adds $30 to your debt for every $1,000 transferred.

Another perk to look for when you select a card for a balance transfer is a cashback bonus. Use the new card to make the minimum purchase by paying some bills that you may otherwise pay from your bank account. Pay that amount from your bank toward your card to compensate, and complete the balance transfer. You earn the cashback reward, and that is usually offered as a gift card or statement credit. This is essentially free money and a boost toward your goal. If you cannot get statement credit but can get a cash card instead, use the cash card to pay toward the new credit card’s balance.

What To Do When Debt Is Unmanageable

Everyone faces hardships at some point in life. If you lost your job, are paying for expensive but necessary medical treatments or are facing another financial hardship, talk to a credit counselor. Only work with reputable credit counselors. They can help you find a solution. In some cases, they may reach out to your creditors and set up a deferment or a hardship payment program. Most creditors will work with you since they can only sell debts to collection agencies for a fraction of what is owed.

How To Pick The Right Solution

To determine which option is best for you, ask yourself the following questions:

  • Can I pay off this debt in less than a year?
  • Is my credit score considered fair or poor?
  • Is my debt less than $10,000?

If you answered yes to these questions, a balance transfer may be right for you. Keep in mind that you can also call your creditors before seeking a loan or balance transfer to ask for a lower interest rate. They may oblige if you tell them that you are trying to pay down your balance and are having difficulties doing so. If you answered no to the questions above, a personal or consolidation loan may be the answer. When you apply for loans, do so when you are ready to accept an offer. Multiple inquiries can temporarily lower your score. However, it is important to compare rates and terms from a few different lenders.