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From the Experts at Credit.com

3 Strategies for Consolidating Debt

by Lucy Lazarony

3 Strategies for Consolidating Debt

Are you tired of juggling all your loans and credit card balances? These three debt consolidation strategies can help simplify your plan to get debt-free.

1. Consolidate Your Credit Cards

Rather than pay five credit card bills each month, why not pay one? Consolidate all those smaller credit card balances onto a single card and simplify your finances while also getting a lower interest rate on your balances.

There are plenty of credit cards with low-rate balance transfer offers. You may even qualify for a card with a 0% rate for 12 or 18 months.

Make the most of that rock-bottom interest rate and pay off as much of your debt as you can during the low-rate balance transfer period.

2. Apply for a Personal Loan

Use a personal loan from a bank or credit union to consolidate credit cards and other debt. Personal loans have fixed interest rates that are traditionally lower than credit card interest rates. Once you qualify for the loan you can choose a loan amount and monthly payment amount that fits your budget.

Pay as agreed on a personal loan and all the debt that you consolidated will be paid in full at the end of the loan term.

You’ll need excellent credit to qualify for the lowest interest rate on a personal loan. So be sure to check your credit scores with Credit.com’s free Credit Report Card before you apply. This completely free tool will break down your credit score into sections and give you a grade for each. You’ll see, for example, how your payment history, debt and other factors affect your score, and you’ll get recommendations for steps you may want to consider to address problems. In addition, you’ll also find credit offers from lenders who may be willing to offer you credit. Checking your own credit reports and scores does not affect your credit score in any way.

3. Get a Line of Credit

Use a personal line of credit from a bank or credit union to consolidate your debt. You don’t need to own a home or property to qualify for a personal line of credit and you may be able to get a credit decision and access to the cash you need to pay off other debts in just a couple of days.

You borrow money from your personal line of credit by writing a check or making a transfer to your checking account.

The interest rate you pay on a line of credit depends on your credit. And you may qualify for additional discounts on the interest rate if you have deposit or other accounts at the bank or credit union. Be sure to ask.


  • Bonnie

    Funny how this works I’ve been trying to build my credit and have applied for credit cards always denied because there is no activity on my credit report my car is paid for and I have a apt so I really don’t have a lot of bills but I would like to buy a house and again I keep on hitting a wall

    • Michelle Anne

      Try starting with a store credit card first like Old Navy or JCPenney

    • Kate

      Go to a credit union and get a secured loan (secured by your savings account). Pay it off ASAP. Get another, pay it off. Get another, pay it off. Three times of this should greatly improve your credit score.

  • Rob

    Credit Cards are evil! Just don’t use them unless you can pay in full each month.
    I’m just a normal guy, but I do have a strong opinion on this – if you can’t afford it, save first and then buy it. Don’t borrow at a crazy interest rate (15-18%) to buy that new thing on credit. It’s not a financially smart decision to pay crazy interest rates and make someone else rich.
    There are plenty of web sites online to get advice. Look up strategies to pay down your debt. It frees you from the shackles of payments and feels amazing – trust me!! I’ve done it.
    I had credit card debt when I was in college. It sucked. So, I paid it off quickly way back when I graduated.
    Now, I am well into my career and *invest* my money instead of *paying interest* to some scum bag credit card company. It’s much better.
    It seems like an unachievable goal when you look at your total debt, but I will tell you that it can be done and it’s easier than you think to pay down your debt to 0. I only have my mortgage at 4%. And, I could pay it off if I wanted to.
    Some folks advocate to first stop the spending. That has to happen. Then, start paying in a debt snowball where you pay minimums on all cards and put as much as you can to the one with the lowest balance. When that card is paid off, put it all toward your next highest balance. You can see how you will eventually be paying over $1000 to one card and then it all goes away.
    Now, you’re free to first reward yourself with a small vacation, and then invest that money you were paying the cards with in a mutual fund. It grows like crazy and you will end up with some serious coin. I’m in my 40’s and there are many months that I make more in my investments than from working at my job. This is possible for you. It takes some dedication and drive, but you can do it.
    Credit councilors are available in this world to help guide you. I have read some of their stuff but never went to any formal classes. I won’t drop names – just find one that you think makes sense to you. And, this class is not a high expense. if they want to charge you thousands, walk out of the office. That’s robbery.

    Best of luck changing your financial world.

    • http://www.Credit.com/ Gerri Detweiler

      Curious, do you use one you pay in full?

      • Rob

        Yes, I have one and pay it off every month.

  • Do For Self

    At 70 my goal is to be debt free in 3. Your ideas are methods that work. I have tried them all. Use a method you can trust, direct response. Talk it over with the party that extends the debt, make arrangements, keep in contact, pay the lowest amount first, until paid in full, all of what you owe.


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  • Meet Our Expert

    lucy_lazarony GravatarLucy Lazarony is a freelance personal finance writer. Her articles have been featured on Bankrate, MoneyRates, MSN Money, and The National Endowment for Financial Education. Prior to freelancing, she worked as a staff writer for Bankrate for seven years. She earned a bachelor's degree in journalism from the University of Florida and spent a summer as an international intern at Richmond, The American International University in London. She lives in South Florida.
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