It can be pretty tempting to have multiple credit cards since many of them are a fantastic way to earn rewards like miles for travel or cashback, besides the fact that a spare credit card can also be a good source for emergency funds.
But life happens, and before you know it, you’re knee-deep in credit card debt. If that sounds a bit like you, then this might be the right time to think about consolidating all of those debts so you don’t run the risk of missing a payment – and negatively affecting your credit score in the process.
Credit card debt consolidation means combining all your multiple credit card balances into one. Here’s how you can do it.
Balance transfer card
Also known as credit card refinancing, balance transfer cards allow you to transfer your existing credit card balances into just one credit card that offers a 0% interest rate for a specified period (often 12 to 18 months), giving you enough time to lower your credit card debts.
A great balance transfer card won’t charge you anything to complete the transfer (although some will charge a small percentage of the amount you transfer) but most will come with an annual fee, so it’s a good idea to do your homework when shopping around for the best deal. A few things to keep in mind here:
Debt management plan
A debt management plan like Safe Debt Management's Pay-In-One program combines your multiple credit card debts into just one affordable repayment, usually putting a stop to interest and penalty fees. From there, you will make a regular single payment to the program, and the debt administrator will pay your creditors for you - so you no longer have to deal with them.
Ideally, administrators of debt management plans work with your creditors so they can help you reduce or even freeze interest and remove some types of charges like late fees. This means you may pay less in total, and you don’t have the stress and worry of having to pay multiple cards.
Depending on your circumstances, requirements and objectives, this is a good option if you’re struggling to pay your credit card debts but don’t qualify for other alternatives.
Personal loans are typically unsecured, so you don’t have to provide collateral if you choose to go down this route. It’s one of the most common ways for credit card debt consolidation because the application process is quick and easy, and typically done online or over the phone. But what’s great about personal loans is they often offer flexible terms and if you have a low credit score, some lenders will still consider your application.
Home equity loan
If you are a home owner and your home has appreciated in value over time or has been paid down at a considerable amount, you could use the equity in your property to draw down a lump sum amount that you can use to pay off your credit card debts. Since an underlying asset is involved, the interest rate is usually lower than other types of loans. This option does have to be approached with caution though, as it will likely improve your monthly financial position by getting those credit card debts out of the way, but you could end up paying a considerable amount in the long term due to spreading this debt over the term of a standard home loan.
Consolidate your credit cards now
The best time to consolidate your credit cards is now rather than later. It’s never a good idea to wait until you can no longer pay all of your balances - so if you feel like you’re about to get into some financial strife, we’re here to help. One option to consider is our Pay-In-One program which allows you to combine your unsecured debts of $5,000 or more (like credit cards), into ONE affordable repayment. To find out more, arrange a FREE no-obligation assessment with a debt specialist today.
Or, if you're not a fan of credit cards and just need a quick cash injection to get you over one of life's hurdles, take a look at our cash loans up to $5,000 to find out how quick and easy it is to get your hands on some extra funds. Once a loan is approved, the cash is usually in your bank account within a few hours – so you can pay off your credit card debts and move forward with just one simple regular repayment.