There are many ways to consolidate your credit card and other debt, such as with a 0% APR credit card, a home equity loan or a personal loan.
Avoid surprises: Before you start, get a handle on your credit scores and get a free copy of your credit reports. This type of credit card charges no interest for a promotional period, often 12 to 18 months, and allows you to transfer all your other credit card balances over to it, usually for a small fee.
This method works best if you have a plan to pay off your debt within the 0% promotional period.
Initial consultations for both bankruptcy attorneys and credit counselors are usually free.
If you think you can successfully manage your debt, then ask yourself a few more questions.
“People usually wait too long to reach out to a credit counselor, because it’s human nature to try to do it on your own,” says Gail Pridgeon, senior credit counselor at Baltimore-based Guidewell Financial Solutions.
A debt management plan typically sets you up to pay off your debt within five years. Counseling agencies are different from debt settlement companies. “If your debt problem is bad enough that you require a debt management plan, then you should also consider making an appointment with a bankruptcy attorney,” says Nerd Wallet personal finance columnist Liz Weston.
A personal loan taken from your local bank or credit union or an online lender may give you a lower interest rate on your debt, or help you pay off your debt in a shorter period of time.
Depending on your credit profile, you may get a lower interest rate at an online lender than at a bank.
Cons: Generally requires a good credit score to qualify.
If debt can’t be repaid during the promotional period, you’ll need to find another balance-transfer offer or face higher rates.
“Sure, you can move debt around from one balance transfer offer to the next, but each time you do this you generally face a 3% fee, which quickly adds up,” says Nerd Wallet credit card expert Sean Mc Quay.