How To Consolidate Credit Card Debts?

How you consolidate credit card debt depends on your current credit score. If you are making the minimum payments and are up to date, you have better options that someone who is behind on their credit card payments. Learn the different methods available for paying off credit card debt.

Consolidate Credit Card Debt Into Your Mortgage

Homeowners who have too much credit card debt, but are up to date on their payments, may benefit from refinancing. Providing you have equity available in your home. To figure out your equity, subtract your current mortgage from the value of your home. That’s the amount of equity available. You can use that equity to pay off credit card debt.

You go to a bank and apply for either a home equity loan or refinance. You’ll get a much lower credit card rate than credit card companies offer and have the bank use the equity to pay off your credit card bills.

Your credit score is critical. With the downfall of the mortgage and real estate markets, banks are becoming pickier about loaning money. Most require a minimum credit score of 640. The best rates are offered to those with scores of 750 or better.

Debt Consolidation Loans Will Consolidate Credit Card Debt

Some banks offer debt consolidation loans. These work like personal loans that combine your credit card debt into one amount and then you pay a monthly payment based on that amount. Again, you benefit from lower interest rates than credit card companies offer.

Debt consolidation companies work like banks, but they pay off your debt for you and you make payments to them. Some companies roll the credit card debt into one, but others will negotiate lower rates with credit card companies and pay each card individually. Try to find programs that roll the debt into one loan because that lowers interest rates.

Some will require automatic payments set up from your bank accounts on a weekly or monthly basis. Many debt consolidation companies charge fees for setting up a debt consolidation program.

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