Having too many creditors can be a major headache. Too many sources of debt can make your life confusing when it’s time to pay bills. Which creditors have prepayment penalties? Did you remember to pay all of your creditors, or are you about to be hit with a late fee? Both questions that many Americans find themselves asking every money, and it’s understandable. At some point, all the small details about your creditors can be hard to keep straight, especially when you start getting up in a number of creditors. Fortunately, it’s easy to learn how to consolidate debt and can be a relatively simple process. There are a few methods that you can use, which one will work best for you depends entirely on your credit score and assets.
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Transfer Cards
Transfer cards are usually considered the best way to go about it if you have good enough credit. On average the minimum credit score for a transfer card debt consolidation is around 680, so unfortunately if you have bad credit this option may not be available for you. For those that have good enough credit, this option is definitely worth looking into. You can often find low promotional interest rates, so as long as you can pay off all of your debt quickly this method can save you a lot off the top of your debt. Unfortunately, if you don’t pay it off quickly you run the risk of the promotional period expiring and being stuck with a much higher interest rate.
Personal Loan Debt Consolidation Methods
Personal loans are a far more accessible method for most people. The credit score required can be a lot lower, as low as 580 can commonly be found but it’s not unheard of to find someone willing to work with you if your credit is lower than that. Personal loans may have high-interest rates, so it’s worth shopping around if you have high enough credit for that. This method is nice because it’s so easily available, and most financial institutions are able to provide a personal loan even if not specifically for debt consolidation.
Other Methods Worth Mentioning
There are two methods worth mentioning that rely entirely on assets you possess. The first being home equity lines of credit. This method requires you to both own a home and have some equity on it. You do need a credit check for this, and you’re putting your home up as collateral for this method but it is a good way to consolidate your debt as long as you know you’ll be good at making the payments.
Another method that some people use is 401k loans. While not loans in the traditional sense, and with a hard limit on how much you can withdraw, this method doesn’t require a credit check. It’s not good for if you have a lot of debt, but it can be useful if you have a low amount of debt or you’re looking for a way to borrow less for your debt consolidation.
Consolidate Your Debt for Peace of Mind.
Consolidating your debt can make your life a whole lot easier. Making a single monthly payment instead of a large number means that you have less that you have to keep in mind when it’s time to pay bills every month. Many people every year go through this process and find that it’s very useful for making their debt situation a lot easier to manage, assuming that they can work on the habits that got them into debt trouble in the first place.