When you’ve got multiple credit cards that are carrying substantial balances, it can feel overwhelming. Every month you make payments, but somehow, the balance never seems to tick downward. Consolidating your credit card debt can be a good way to lower the amount of interest you pay each month — not to mention save your sanity — but is it right for you? Before you decide whether to consolidate, consider these factors.
How Much Debt Am I In?
Credit card debt can feel so suffocating you may not even want to know the real amount of debt you’re in — but you need to. Add up all of your statements to get an idea of how much you’ll need to consolidate.
How Much Interest Am I Paying?
If you’re paying interest on every balance, you’re paying too much. Determine how much money you pay each month in interest. If it’s more than you’re paying toward the principal, consider consolidating.
How Much Can I Pay Each Month?
Having a reasonable expectation about how much you can pay down each month is critical. Determine what your budget will permit; this can help you decide which option for consolidation is best. Once you have a good idea of how much debt you’re in and how much you can pay, start looking around for potential ways to consolidate. Here are a few options for credit card consolidation:
Take Out Another Card
It seems counterintuitive, but if your credit score will allow for it, a low-interest credit card with a high enough balance to pay off your other debts can lower your interest rates overall. Pay off your other balances with one card, and then focus on chipping away at that lump sum.
Get a Loan
In the event your credit score won’t permit another card or your credit card debt is too high to be paid off with another card, your financial institution might be able to offer you a single loan to pay off the debt. That way, you will just have the loan (and its lower interest rate) to pay off. You can also try a debt consolidation service to help.
Seek Credit Counseling
If your credit card debt is truly insurmountable by other means, there are still options. A credit counselor can help you find other ways to manage your credit card debt and can make you feel less alone in the process.
Although credit card debt can feel overwhelming, there are solutions available — and a good one for you might be to start by trying to get all of your debt in one place.