3 Ways To Consolidate Debt – And Make Paying Out Cheaper
Juggling a lot of debt? Here’s how to get rid of them more easily and cheaply.
You may be in debt because you have temporarily lost your job and been unable to pay your bills. Or maybe you have amassed medical debt and are trying to manage it plus a few credit card balances.
No matter what the situation, a debt is difficult enough to deal with on your own. However, when you have multiple debts – such as multiple credit card balances or a combination of credit card debt and credit – it can get even more difficult. Here are some ways to consolidate your debt – and lower the interest rate so you can cost less.
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1. A credit transfer
With a credit transfer, you transfer your existing credit card balance to a single card with a lower interest rate than you are currently paying. Some credit transfer cards actually have an introductory rate of 0% – if you pay off your debts before this introductory period ends, you will no longer accumulate interest. To get the best credit transfer deals, you need a good credit rating. If your balance isn’t that high, you can still make a balance transfer, but you can get stuck on your new card with a higher interest rate.
2. A personal loan
With a personal loan, you can borrow money for any reason. If you’re paying a medical bill and also have some outstanding credit card balances, you can take out a personal loan to cover all of that debt. The great thing about personal loans is that they come back in equal installments, so your payments on your loan are comfortable and predictable. As with a credit transfer, the better your credit rating, the lower the interest rate you can expect. But there are also personal loans that are specifically designed for borrowers with poor creditworthiness.
3. A cash out refinancing
With a mortgage refinancing with payout, you borrow more than your existing mortgage balance. You can use the excess cash for any purpose. A cash out refinance is actually a great way to consolidate and pay off debt, and with refinance rates low today, you can save a bundle compared to the cost of a credit card or personal loan.
To qualify for a cash out refinance, you need adequate credit and equity in your home. Equity is that part of your home that you fully own. If you owe $ 100,000 on your mortgage and the current market value of your home is $ 150,000, that leaves you with $ 50,000 in equity. For example, if you’re looking to do a cash out refinance of $ 120,000, it wouldn’t be a problem, provided your creditworthiness is high enough.
Consolidating debt can make it easier to avoid scenarios like forgetting a payment and wrecking your credit. And it can save you money. These consolidation options are well worth exploring and which one makes the most sense for you.