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From the Experts at Credit.com

5 Tips for Consolidating Credit Card Debt

by Lucy Lazarony

5 Tips for Consolidating Credit Card Debt

Feeling weighed down by high-interest credit card balances? These debt consolidation tips can help.

1. Check Your Credit

Review your credit reports and correct any errors. An error on your credit report could prevent you from qualifying for the debt consolidation help that you need. Credit.com’s free Credit Report Card can help you understand what’s inside your credit report, and gives you your free credit scores, too. Get a free annual credit report from each of the three national credit reporting agencies.

2. Consolidate to a Low-Interest Credit Card

If you’ve got good credit, look for a credit card with a low-interest rate. Transfer high-interest rate credit card balances to a single card and save money on monthly finance charges as you pay down your debt. For consumers with good credit there are several balance-transfer and low-interest rate credit card offers available.

3. Get a Loan From a Local Bank or Credit Union

You may be able to consolidate your debt with a personal loan from your bank or credit union. Ask the loan officer at your financial institution for more information.

Before applying for a loan, ask about the lender’s credit requirements. Is there a minimum credit score for qualifying for a loan?

4. Get a Consolidation Loan From an Online Lender

Choose a reputable lender when applying for a debt consolidation loan online. Check out any potential online lenders with the Better Business Bureau and look for complaints. And check to see if a lender is registered to do business in your state by contacting your state Attorney General’s office or your state’s Department of Banking or Financial Regulation.

Beware of any lender that promises to make you a loan regardless of your credit. Stay clear of websites and lenders that charge you big upfront fees for a debt consolidation loan.

5. Sign Up for a Debt Management Plan

Reach out to a credit counseling agency about a debt management plan. With a debt management plan, you make one monthly payment to a credit counseling agency and the agency pays each of your credit card lenders. A lender may lower the interest rate on your credit card balance when you participate in a debt management plan.


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

    It can. However, credit counseling doesn’t usually affect credit scores the way most people think. Credit scoring models generally don’t take into account the fact that an account is being paid through a Debt Management Plan.

    However, accounts that are accepted into a credit counseling agency’s debt management program will be closed. and will be updated on your credit report to show that the account was closed. Closing active credit accounts can have a negative impact on your score. More about that here:

    Does Closing Your Credit Card Account Affect Your Credit Score?

    Over time, paying off your debt this way can have a positive impact on your credit since you’ll be largely debt-free in 3-5 years. So if you find yourself in a situation where it makes sense to get help with your debt, don’t hesitate to get it.

  • Heather

    I have $15,000 in high interest credit card debt. I have good credit and a credit score over 700. Would it be better to get a personal loan from my credit union or transfer the balances onto 0% interest credit card(s)? What factors should I consider for each? Which source would affect my credit score more?

    • http://www.credit.com/ Credit.com Credit Experts

      Heather —
      It’s hard to know the answer because it’s impossible to know your exact situation. A credit score factors in both non-revolving (car loans or mortgages, for example) and revolving (usually credit cards) credit. Diversity of credit has an effect, as do on-time payments and the amount of credit you access versus your credit limit (under 10% is best of all, but under 30% is considered acceptable).

      One idea might be to split the difference and do both. You’ll want to use less than 30% of your credit card limit (thus you’d need a limit of $50,000 on a balance-transfer card to do what you’re considering without dinging your score).

      You can read more about debt payoff strategies and credit scores here:
      5 Ways To Get Out of Debt: Which Will Work for You?
      How to Build Credit the Smart Way
      Making Sense of Your Credit Score

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

    There is no magic ratio that is “good” but generally if your balances on any of your cards start creeping above 20 – 25% of your available credit, you may see an impact on your scores. Have you checked your credit scores to see how this factor is impacting your credit? Here’s how to check and monitor your credit score for free. As for the new account, it may have an impact on your score but usually for most people that levels out once the bills are paid on time for a few months. If it will save you a good chunk of money it may be worth it!

  • http://deenowherechef.tumblr.com/ Deedilly

    Trying to get a little bit of business advice, hope someone can help. We are struggling to make it through our slow months right now. We have about $100,000 in business debt currently active and all in good standing, we have never made a late payment. But we are getting buried with making sure we are paying all of these bills on time while still being able to order products to keep the business fully functional. We are scared we are heading towards bankruptcy or even closure. Would a debt consolidation company be able to help us? Or does it seem we are too far gone? I guess I was hoping with a debt consolidation company we could lower our monthly burden, stretching out our payment to 48-60 months.

    • http://consumerrecoverynetwork.com/ask-a-question/ Michael Bovee

      It is possible to consolidate business accounts, though most policies banks have in this area favor consumer debts.

      How many of the business accounts were personally guaranteed?
      Who are the lenders?

  • Going Crazy

    I have found myself in a debt loop. I got a loan to payoff my credit card debt and then something happened with our house and I racked it back up. So now I’m in this constant loop of trying to get it all paid off but have to use my credit cards because I have used my whole paycheck to pay my bills. I tried doing another little loan but it didn’t help much and now I have that debt too. Where can I go to get a personal loan that will give me the amount I need without telling me I have too much credit card debt when thats the purpose of the loan!


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