Credit card debt can cause considerable stress – not to mention financial issues — as it builds on itself and eats up your cash. Credit card companies often charge high interest rates, and there are usually high fees if a payment is late or missed.
There are ways to get out of credit card debt. One of the options may be to consolidate the debt into a personal loan or onto a 0%-interest card. Should you consolidate? That’s a question you need to ask before you do so.
What are the benefits of consolidating credit card debt?
One of the major reasons to consolidate credit card debt is to reduce what you owe each month. By consolidating it into one card, it may be possible to lower your monthly payments and make them more affordable. For example, if you currently have three payments of $50 for your credit debt, a personal loan might reduce them to $100 or less depending on the interest rate.
Interest rates are another important topic. 0%-interest credit cards have limited periods where you won’t pay interest on transfers, which may help you significantly reduce your monthly payment and pay off the debt more quickly. You do need to pay it off before the interest-free period expires, though. Personal loans usually have lower interest rates than credit cards, too, but they have a consistent rate throughout the life of the loan in most cases.
Remember that consolidating your debt isn’t the only option. Bankruptcy could be another method to help you get control over your finances again as well. It’s wise to know all your legal options before taking the step to resolve your debts so that you make the best decision for your own situation.