Consolidating Credit Card Debt
A majority of people are struggling to pay their consumer debt. It makes sense to believe that paying off debt is not an easy task anymore. Credit card is a toxic luxury, and you must know your option of consolidation before you buy anything on credit. Check out our list of possible steps you can take to settle the debt in the most natural way.
Balance transfer credit card
Generally, an introductory zero percent APR on new transfers is offered on balance transfer credit cards. As far as the market leader goes, they can allow you fifteen months or more to settle your balance interest fee.
However, balance transfer credit cards are not void of drawbacks. Majority of these cards involve a balance transfer fee. You are obliged to pay somewhere between three to five percent of the transfer amount. If you are about to transfer a more significant amount, then you will be accountable to pay hundreds of dollars.
Home equity loan
In case you own a home with significant equity in it than borrowing it against the equity to settle down credit card debt can be a smart move. Typically, home equity loans do not charge high or unfixed interest rates.
Nonetheless, the catch lies in your home’s transformation into collateral which will be lost in case your default on loan. Again, some lenders will charge enormous costs for closing costs and will need you for a great deal of paperwork to initialize a home equity loan. All in all, it is worth to consider this option as it can turn out to be a comparatively favorable decision.
Due to its set repayment period, a personal loan is a smart way to settle credit card debt. Unlike a credit card where a repayment schedule is not fixed you get to know about the moment after which you will be debt free.
Moreover, interest rates are also lower on personal loans that allow you to save money while paying off debt. However, you must have excellent credit to enjoy the benefits of favorable interest rates on a personal loan. Additionally, your monthly liability on a personal loan can be higher than your current payment. Thus, do not go for a personal loan unless you are sure about its benefits.
Borrowing money from your retirement is technically a desperate measure to settle your credit card debt. But it is also the last option if you do not have good credit and you’re not viable to take advantage of other methods stated above. It is considered as the last resort because the money you borrow leaves the investment space that adds to the total cost of the loan.
Also, the choice of quitting the job gets eliminated while the fear of losing the situation prevails. Your employer can pressure you to pay the remaining amount within a given period.
Make sure that you go through the details before opting any one of the steps mentioned above as lack of information is bound to hurt your cause.