Refinancing is your best option to combat out of control credit card debt. It takes a certain amount of discipline to settle the debts and may involve a couple of missteps along the way. Knowing your limits is useless information without a plan in place. Use the five tips below to right the ship with all of your credit card debts.
A balance transfer credit card is the perfect weapon to get rid of debt. It is a special card that defers interest, the biggest enemy of any debt. Ease of use is one of the main reasons this method is so attractive. By having all of your debt on a single card, it provides a cleaner way to see and deal with your financing issues. Think of it as the credit card version of getting a cable+internet+tv bundle.
Consolidation loans are used when you have exhausted a lot of the main options. But that doesn’t mean it is an ‘end of the road’ financial choice. Debt consolidation loans have a requirement of at least an average credit score. This is completely different than a bad credit loan, which is something you want to stay far, far away from. The small fees involved in getting a debt consolidation loan are worth it, especially when you factor in the financial advice given by the professional in charge of the loan.
Sometimes a simple phone call can resolve all of your credit card debt issues. Be honest with the credit card issuer and work towards a plan of action. This will prevent them from sending the debt to collections, and in turn, will keep you in good standing with the company. At the very least, a repayment plan with the company should be your first step before looking at other debt consolidation terms on the list.
Credit card refinancing is another method that requires good to excellent credit. Take a look at your debt and finances and decide how long it would take to pay it off. Now factor in the interest applied to the debt over the time it would take to pay it off. With all of this information, make a phone call to the credit card issuer and check in on refinancing your credit card. This is different than a balance transfer and is not something that everyone will qualify for. The key is to make sure that the refinancing allows you to pay comfortably over a long period of time.
With a home equity loan, you are putting your home on the line for a low-interest rate loan. The upside is lower payment amounts than the other options. The downside is that you risk losing your home if you default on the payment. Use a home equity loan as a final choice if none of the other debt consolidation options are available.
It is still a challenge to keep your finances healthy after reducing credit card debt. Your future credit score depends on your ability to keep track of unnecessary spending. Use self-discipline to avoid common mistakes, and you’ll never fall into the same habits again.
