Best consolidating credit card debt
If you enroll in a DMP, you’ll pay the counseling agency each month, and in turn the counseling agency pays each of your participating creditors.
It also generally works best when there is no other balance or charges on the card while the transfer is being paid off.Only the two of you can decide if that is really worth it.When it is best: This can be an excellent option when the lender and borrower are both on the same page, and willing to put their agreement in writing to make sure there are no misunderstandings.High levels of debt—especially credit cards with balances approaching your credit limits—can make it difficult to qualify for new credit. In particular, if you get a personal installment loan with a fixed repayment period, you will know exactly how much you have to pay each month until you are debt-free.You won’t run the risk of falling into the trap of making minimum payments and stretching out the debt for decades.Personal loan A personal loan is often what people have in mind when they talk about consolidating debt.
The ideal solution here is a loan with a low interest rate and affordable monthly payment that you can use to pay off other high-rate debt.
When it is best: A DMP works well for someone who isn't able to successfully pay off their debt on their own, and needs the extra help and support a counseling agency can provide.
Loan from friends or family A family member who is willing to loan you the money to pay off other debts may also be willing to do that at a low interest rate, and to be at least somewhat flexible with the terms.
Offers with very low rates—0% or 3.99% for example—typically last for 12-18 months. Another thing to keep in mind: If you use a single credit card to consolidate several other balances, you may wind up using a substantial portion of your available credit, and that can hurt your credit scores—at least until you pay it down.
You will want to weigh the impact of that against the money you’ll save to decide whether it is worth it.
Debt consolidation often seems like the perfect way to conquer your debt: consolidate your balances into a single loan and make one monthly payment until you are debt-free.