Credit card debt in the US has been soaring, reaching over $1 trillion in 2019. The average household is estimated to carry approximately $8,398 in card debt.
If you are shouldering a growing debt on your credit card, it’s time to get out from under it.
But where to start? One of the ways is to consolidate credit card debt, and DebtHunch (that’s us!) is a great place to start.
If your debt is escalating, it can seem near impossible to try and clear it.
However, by doing so, you will be taking making an important move towards solid financial health. At the same time, you will also reduce money-related stress and be able to take back control over your paycheck. These are just some of the reasons to pay off your debt.
By consolidating your debt you can give yourself the chance to achieve these things and more.
However, you need to find a reliable place to start looking for debt consolidation solutions. Want to know more? Just keep reading.
What Is Debt Consolidation?
In case you are unfamiliar with the details of debt consolidation, we are going to quickly cover the basics.
Debt consolidation is the practice of combining your debts so that you only have one monthly payment to make. This is done by restructuring or refinancing.
The Benefits of Debt Consolidation
There are two key benefits of debt consolidation.
The first benefit of this is your debt will be simpler to manage and pay every month.
The other substantial benefit of debt consolidation is that, in many cases, you may be able to lock down lower interest rates than those on your current debts.
For example, say you have 4 credit cards (the national average). You pay 16%, 18%, 22%, and 21% across each of them. This means that a debt consolidation solution with an interest rate of 15% could result in substantial savings in interest over time.
How to Consolidate Credit Card Debt
Simpler debt payments and lower interest rates could be the key to freeing yourself from the debt cycle. But how exactly does one consolidate credit card debt?
There are a few options you can choose from. These are as follows.
Using a Personal Loan
A common way to consolidate debt is to take out a personal loan. The loan is then used to pay off your existing debt. Once these amounts are settled, you will be left with one monthly payment to make on the new loan.
The aim of the game with debt consolidation is to always secure a lower interest rate than what you have on your existing debt. This will give you the edge you need to successfully clear that loan. Additionally, depending on your needs, you can also opt to try for longer terms, which will bring your monthly payments down and give you more time to settle the debt.
However, although personal loans can be a good consolidation solution for some—if your credit score has suffered, you might be pressed to find a loan option with viable interest rates.
If this is the case, you may want to try one of the next two consolidation methods.
Using a Balance Transfer Card
If your credit score is healthy enough to apply for a new line of credit, you may be able to take out a balance transfer card. Balance transfer cards allow you to shift your existing credit card debt balances and pay them off through the new card.
This will act to consolidate your debt. It can also score you lower interest rates, or even no interest at all.
Some balance transfer cards offer zero rates of interest for a certain time period. This can be anything from 6-24 months. During this time you will be able to enjoy an interest-free period while you pay off your debt.
Take note, however, that you must pay your credit card debt off in full during the interest-free period. After that, you will be charged regular credit card rates as determined by your credit score and other variables.
Using a Debt Consolidation Company
If your credit score has taken a dive, and you can’t secure a personal loan or balance transfer card with low rates, you can also use a debt consolidation company.
Debt consolidation companies generally do not have as strict credit score requirements as personal loan solutions and lines of credit. What’s more, they usually offer interest rates of between 1% and 17%.
Upon signing up, a debt consolidation company will negotiate with your creditors to see if they can gain lowered interest rates and better terms. They will also set up a debt consolidation solution for you. After this, you will make your debt payment over to the company, who then distributes it among your creditors.
Why Choose Debthunch?
If you have decided that debt consolidation is the boost you need to get ahead of your debt, the next step is to start researching different options and solutions.
This can take a lot of time and head-scratching, as you will have to be very thorough in your research. You not only need to ensure that you get the most advantageous solution, but also that you avoid any scams.
This can take hours if not days.
Which is why we exist.
We have developed a matching tool that will align you with the best debt consolidation solution for you from our handpicked list of the most reputable offerings. The best part? It does this instantly. What’s more, our analysis of your details will not trigger a ding on your credit score—as most other inquiries do.
If you are wondering whether this is too good to be true, it’s not. We have an A+ rating with the Better Business Burea and have been in business for over 16 years.
Leverage Our Service to Find the Smartest Solution for You—Instantly
Need to consolidate credit card debt now?
If so, we encourage you to try out our matching tool so that you can find the smartest consolidation solution for your needs. Save yourself hours of time and avoid the risk of ending up with a dodgy solution provider.
If you have any questions at all, we are happy to help, so do not hesitate to contact us.