3 Signs You Should Consolidate Credit Card Debt

Consolidating your credit card debt may be a way to get out of financial trouble.

Due to the high interest rates associated with credit cards, it can be difficult to pay off credit card debt. Consolidating your debt will make it more affordable and easier to pay put credit card debt into one payment.

Here are the two best ways to consolidate credit-card debt.

It is necessary to apply for debt consolidation. There may be fees for balance transfers or loans. Only do this if it helps you. Here are some signs that consolidating debt is a smart idea.

1. You have difficulties managing your credit-card payments

It can be challenging to manage your payments when you have different credit cards. You are more likely to forget a date or miss a payments and end up paying a late fee. You may not have enough funds in your bank accounts to cover every payment.

Consolidating your credit card debt reduces the number of monthly payments. Consolidating your credit cards debt means that you will have only one monthly payment. This is much easier to remember.

Consolidating your debt may allow you to make less on your credit cards monthly payments if they have become too overwhelming. This is especially true for loans. To receive a lower amount of monthly payments, you can request a longer term loan. Remember that a longer loan means higher interest fees.

2. A high credit score

An excellent credit score can help ensure you are eligible for the best financial products. You can use balance transfer cards to pay off your debts with the longest 0% APR offers and consolidation loans that have the lowest interest rates for debt repayments.

How high can your credit score have to be? Although approval is not guaranteed, a minimum FICO(r) score of 670 will suffice. This is usually enough to get either a balance-transfer card or a low rate loan. If you don’t already know your credit score there are plenty of options available to help you get it.

It is a smart decision to take advantage of a loan with a FICO(r), score of 670 and higher. Consider balance transfer cards as well as rate-shop loans.

3. It will take at least six to eight months to pay off your debt

Consolidating your debt is better for bigger debts, which are more difficult to pay off. A lower interest can help you save hundreds of thousands of dollars whether you pay it for one year, two years or more.

However, this isn’t as useful for small debts which can be paid off in just a few months. However, you could still apply for a balance transfer card to reduce interest. These cards usually charge a balance transfer fees of 3% to 5.5%. This fee can erase most, if not all, of your interest savings.

Do the math and calculate how long it will cost to pay off your debts. Credit card payoff calculators can be helpful. To view the payoff timeline, you need to enter your total balances, interest rate, monthly payment amount, and the amount that you can afford.

The rule of thumb is that debt consolidation should be considered if you plan to make payments for at most six months. It is probably worth it if you are able to pay it off sooner.

You should know one last thing about debt consolidation. Credit card debt cannot be consolidated on its own. You have to pay as much as possible, and be careful with spending on your credit cards. Consolidating your debt will save you money if you do this.

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