5 Ways To Consolidate Credit Card Debt
Feeling overwhelmed with credit card debt? Don’t worry, you are not alone. Credit card debt is at an all-time high in the U.S with Americans owing up to 1 trillion dollars.
No need to freak out about large sums of credit card debt, we are here to walk you through 5 steps to take to consolidate credit card debt.
1. Calculate Your Monthly Income and Expenses
To start figuring out what method of credit card consolidation is right for you, you first must have a detailed understanding of your budget. Write down all of your sources of income and all of your expenses down to the most minimal recurring expenses.
2. Get Your Credit Report and Calculate The Total Amount of Credit Debt
You are allowed to get a printed credit report once a year. With that, you will have a detailed list of who you owe and how much you owe. Log in to each account and calculate how much your interest rates are and what your minimum payments are for each.
In order to choose a credit card consolidation plan, you must know the total amount of money you owe to creditors.
After subtracting your monthly expenses from your income you’ll know what money you have available to set aside for credit card payments. This would be the minimum payment you are available to make each month.
Lastly, use an online interest calculator to figure out your weighted average interest rate.
3. Find Your Credit Score
Finding your credit score on your credit report is probably the biggest indicator of what consolidation plan you will go for.
If your credit cards are maxed out you can expect to have lower than average credit score. If your score is 630 or lower it will be difficult for you to qualify for a loan or a credit card to transfer the balance to.
4. Find out If Your Debts Are Already in Collections
If you miss out on credit card payments for six months your accounts automatically default. This means that your credit score probably reflects that and it will be difficult to find many options for your debt consolidation.
Credit counselors can only directly work with the original creditors and not debt collection agencies. The best option would be debt settlement or even bankruptcy if you have a high amount of debt and low income.
5. Pick a Plan to Consolidate Credit Card Debt
These are some of the options you can look into to consolidate credit card debt:
- Debt management programs
- Credit card consolidation loans
- Debt settlement
- Home equity loan
- Balance transfer credit card
- Retirement account loan
- Asking a friend or family member for help on smaller loans
As you can see, there are many options available for you depending on your unique situation. Finding a plan that works best for you can is no easy task that can be confusing.
People often turn to debt consolidation companies or advisors to help identify the best plan for their finances like Debthunch, for example.
Who is Debthunch? Debthunch is a debt consolidation company that does all the hard work of analyzing your finances and coming up with the most beneficial plan for you.
Consolidating Debt Doesn’t Have to Be Complicated
The goal in choosing a plan is knowing that you are avoiding going into debt again and that you will be able to pay a realistic amount based on your income. You don’t have to choose the option that can lead you to put your house or car at risk.
Take a deep breath and know that with the help of a debt consolidation company you can and will find a plan that is right for you.
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