Consolidating credit cards credit score
Our credit counselors can help you understand the ins and outs of credit card debt consolidation, and provide tips for evaluating offers on credit card debt consolidation loans.We also offer debt management plans that may be a better alternative to the many offers for consolidating credit cards that you receive in the mail.Consolidation works best when your ultimate goal is to pay off debt.The four most effective ways to consolidate credit card debt are: This type of credit card charges no interest for a promotional period, often 12 to 18 months, and allows you to transfer all your other credit card balances over to it.One benefit is that this loan won’t show up on your credit report.But the drawbacks are significant: If you can’t repay, you’ll owe a hefty penalty plus taxes on the unpaid balance, and you may be left struggling with more debt.Lenders don’t charge fees for paying off your loan early, but they may charge upfront origination fees that range from 1% to 5% of your loan.Some also send money directly to your creditors, increasing the odds of successful debt consolidation.
For online lenders, the lowest rates go to those with the best credit; rates top out at 36%.
Most issuers charge a balance transfer fee of around 3%, and some also charge an annual fee.
Before you choose a card, calculate whether the interest you save over time will wipe out the cost of the fee.
You can use that money to pay off your credit cards or other debts.
A HELOC typically requires interest-only payments during what’s known as the draw period, which can range from five to 20 years but is typically 10 years.» MORE: The good and bad of home equity loans Pros: Back to top If you have an employer-sponsored retirement account, it’s not advisable to take a loan from it, since doing so can significantly impact your retirement.