To get relief from your existing loans, you can consolidate them to one, and it can be an excellent way to feel light. Here’s how it all works –
You have to decide on taking a new loan, get a new credit card or get enrolled in a debt management plan. These options will eventually take care of your multiple balances. Finally, you will only have one payment to be made on a monthly basis, which can be a loan, credit card or a debt management plan. This will eventually take care all your debt payments, and hence you can save money.
The best method would be to go for a credit card loan consolidation, but it depends on your situation, and you should consult a credit counselor who is not making a profit about the same. Below are few bits of advice you need to see and move forward with a strategy that will suit you in your best interest.
Advice #1 - Scrutinize all of your Credit Reports including Scores
To begin with, carefully check all credit reports in your first step. Because if there is an error then it could prevent you from getting the credit card loan consolidation and if you find any sort of error, make sure you file a dispute. Get your credit report in a yearly form from major credit reporting firms.
By getting to know your credit report, you will now know where you stand, and this will help decide what plans will be much suited in your case when you go about finding a consolidation plan.
Advice #2 – Learn about all the options before you act
Once you have a good credit score, you just need to find a credit card with the low-interest rate. Time and time again you can transfer high-interest rates to a single credit card, and some offers give you attractive benefits like 0% interest rate for the first year or so. So, getting the best credit card offer is not a piece of luck, you have to find it by surfing through all the options in the market.
Advice #3 – Do all the calculations
Credit card loan consolidation can save you a lot of money, but people confuse it with a free option. When you transfer your balance, a transfer fee may be applied which may be higher in some cases. This fee should not be higher enough to outweigh the primary benefit you wanted. The promotional offers of 12 months of 0% interest mean you have to return the debt within your time frame. Otherwise, you may not save anything and end up paying higher amount altogether.
Advice #4 – Credit Scores should never be neglected
Don’t overlook your credit scores after taking consolidation loans, keep a check on them and avoid maxing out your credit card limit, as it will hurt your credit rate for sure.
Closing old credit cards is also not recommended as this will also hit your scores negatively. Always maintain a 10% rule on using your max credit limit, which means you do not use credit card when you’re left with a limit of 10% or less.
Advice $5 – Stick to your plan
You have transferred balances, and you are paying off with a personal loan or maybe you are using a debt management plan to consolidate. All of this will only help if you commit to the plan and if you have a promotional 12-month zero percent interest than paying everything within your time limit is the best thing to do. This will eventually make your credit scores stronger than ever.