Using one credit card as the repository for all your card debt is fighting fire with fire, so be cautious if this is your plan for debt consolidation. Also, you generally won’t learn the APR or credit limit until after and unless you’re approved. Before applying, ask about balance transfer limits and fees. Getting an unsecured card ensures you won’t risk any assets. The card will need a limit high enough to accommodate your balances and an annual percentage rate (APR) low enough to make consolidation worthwhile. Transferring your debt to one credit card, known as a credit card balance transfer, could help you save money on interest. If you fail to repay the loan, you could lose your house to foreclosure. Home equity loans can also be a risky method of debt consolidation. However, taking a long time to pay off your loan could mean paying more in interest. Because home equity loans and lines of credit ( HELOCs) have lower interest rates, they may cost less than a personal loan or balance transfer credit card. Home equity loans or lines of creditĪs a homeowner, you can use the equity in your home to consolidate your debt. Check out top personal loans for debt consolidation and compare lenders to find the best personal loan rate for you. However, be aware that a large loan with a low APR requires good credit. While banks and credit unions offer personal loans, subprime lenders are also very active in this market, so shop carefully and compare rates, terms and fees between three or more lenders.īecause a personal loan is unsecured, there are no assets at risk, making it a good option for a debt consolidation loan. Loan amounts vary with credit score and history, but generally top out at $100,000. Personal loansĪ personal loan is an unsecured loan that, unlike a credit card, has equal monthly payments. It is also important to note that only some types of debt can be consolidated. You should only consolidate your debt if you qualify for a lower interest rate than you are currently paying. Remember that debt consolidation is not for everyone. There are pros and cons to each option and, as always, you’ll want to shop around for financial products to ensure you’re getting the best rate and terms. Once you run the numbers, choose a method to consolidate your debt. Try adjusting the terms, loan types or rate until you find a debt consolidation plan that fits your goals and budget. Bankrate’s debt consolidation calculator is designed to help you determine if debt consolidation is the right move for you.įill in your outstanding loan amounts, credit card balances and other debts to see what your monthly payment could look like. The goal is to streamline payments, lower interest, and pay off debt more quickly. Debt consolidation is the process of combining several debts into one new loan.
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