A credit card consolidation loan is a good idea if it reduces the cost of your debt and allows you to repay what you owe sooner than you would otherwise. Furthermore, a credit consolidation loan is the best choice if it will save you more than the top balance transfer credit cards.
Credit card debt consolidation loans help put all your balances in one place. But they’re not worth it unless you also get a reduced interest rate relative to what you’re currently paying. Checking with a personal loan provider to see what rates you’re pre-qualified for should give you an idea of whether you’ll actually save money if approved.
If you can qualify for a balance transfer credit card that will accommodate all of your debt and provide a 0% introductory interest rate for 12+ months, that may be a better choice. That’s easier said than done, however, so it’s a good idea to keep your options open.
Credit card consolidation loans are a good idea when they:
- Save you money on interest.
- Help you get out of debt sooner.
- Offer a better deal than balance transfer credit cards.
If you can’t find a credit card consolidation loan that will save you money, or qualify for any good balance transfer cards, there are a few alternatives to consider. A secured personal loan or home equity loan could get you lower rates, but at the risk of losing your property/home if you default. A loan from a friend or relative could get you low rates but could put stress on your relationship. Finally, other debt solutions like settling with your creditors may be helpful.
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