Is there only one way to consolidate your credit card bills?

In one of my last posts, I briefed about debt relief strategies – the popular ones which you can opt for with professional help. In this article, I’ve thought of discussing about one of the strategies – debt consolidation. There are 3 ways you can consolidate your multiple bills. Go through this article to have an idea regarding the options.

By enrolling in a consolidation program

You can approach a consolidation company if you’re not able to manage your multiple bills on your own. When you go for the counseling session, a counselor, on behalf of the company, will analyze your finances and decide whether or not you’ll be benefitted by enrolling in a consolidation program. As you sign the agreement, the counselor will decide upon an affordable amount which you need to pay to the company every month. The representative will also start negotiating with your creditors to reduce the interest rates on your debts, so that it becomes easier for you to repay the bills. When you make the payment, the counselor will disburse the amount amongst your creditors on your behalf. Thus, you’ll gradually repay all your debts through single monthly payments.

By taking out a consolidation loan

Taking out a consolidation loan is also a suitable way to be out of your multiple debt problems. A consolidation loan is similar to a personal loan which you take out from a financial institution. You’ll be able to take out such a loan at a comparatively lower interest rate if you have a good score. Once you obtain the loan, you can repay all your outstanding credit card dues with the loan. Thus, you actually replace your multiple bills with a single loan; or, it can be said you actually replace your multiple monthly payments with a single one, which you need to make in order to repay your new loan. Moreover, the interest rate on the new loan is usually lower than the sum total of the existing rates on your debts.

By opting for balance transfer

There’s another way to consolidate and repay your credit card bills – by opting for balance transfer method. In this debt relief strategy, you choose a card with the lowest interest rate and with good credit limit. If you have less available credit limit on this card, then at first, repay the dues, so that you have sufficient limit. Then, with your creditors’ approval, you transfer your high interest debts to this card with the lowest interest rate. Thus, you can repay your existing credit card bills with a single monthly payment at a low interest rate. You can also take out a balance transfer card for the purpose. But, such cards usually come with a time period within which you need to pay off the entire amount; otherwise, you need to repay the remaining amount at a quite high rate of interest.

Consolidation – Benefits

Irrespective of the option you opt for, there are some common benefits of paying off your credit card dues with the help of consolidation. The benefits are discussed below:

  • Repay multiple bills through single monthly payment
  • Pay off your outstanding dues in full
  • Can avoid calls from creditors and collection agencies
  • Stress is reduced as gradually you can repay debts in full
  • Easier to manage payments as you need to make only one per month

So, what do you think? Is this a suitable strategy to repay your bills?

Keep reading for other debt relief options, which I’ll discuss in my upcoming posts…

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