More than half of a million American natives have credit card debts every month. And the average balance usually varies around $4,450. There’s no surprise that credit card debts can quickly get out of control if you don’t pay it regularly. And especially when you have liability on more than one card. What happens is that the interest rate gets doubled and impacts your bank balance.
One of the most prominent reasons to face this debt is using multiple cards at a time. If you are also facing the same situation, then you should start finding ways for credit card debt consolidation. Indeed, it is the only way that saves a lot on those hefty interest charges.
What does consolidating credit card debt involves?
You utilize a new funding source such as balance transfer or personal loan to pay off your debt. In simple words, the theory is that payments are easier to manage, and the interest rate decreases gradually. But it is not the same as the debt settlement because in that you have to pay the entire amount in one time without any negative consequences.
Transferring Balance
It is a process that includes transferring debt from a current credit card to a new one, ideally one with a 0% APR (Annual percentage rate) period. The duration usually varies from 6 months to 21 months. Yes, it is a win-win situation for both the borrower and the creditor.
Processing time -This particular process takes almost 14 days to post to your account. Once the transfers finish, you can continue to pay balances on time, to not incur late fees.
Credit Card Debt Consolidation via Unsecured Loans
They are generally known as personal loans and offer a fixed amount for a limited period, and at a fixed interest rate.
Processing time – It all just depends on the loan you take out, and you receive the funds in one or two business days.
Property Equity Loan
These home loans are equity-based, and a fixed amount is offered for a fixed time and interest rate. But the primary part is that they are secured by your home, which means that your property is collateral. And in any case, if you default the loan, the creditor has the authority to foreclose your home.
Processing time – It generally takes at least 30 days.
401(k) Loan
This loan processes when you borrow money from any of the existing 401 (k) plan to clear the balances. The minimum amount you can borrow is usually less than $50,000 or 50% of the vested balance. After withdrawal, a repayment plan is shared that also mentions the interest rates. The standard duration to pay off the loan amount varies around five years, which is extended to 10-15 years in some instances.
Processing time – The duration depends on the selected plan and how you have submitted the application, online or physical form.
Debt Consolidation Program
It consolidates your pending payments related to your credit card, not your credit card debt. Instead of making multiple payments to different creditors/banks, it is suggested to make payment to an individual Debt consolidation program. So that the expert can use your cash to pay the debt as required on time. They can even negotiate with money lenders for lower interest rates and relevant fees.
Processing time – After the initial consultation, it is vital to stick to the plan. Make sure that you pay consistently on time, and you can observe how it helps in consolidating credit card debt.
Ultimately, if you are still not clear with all these options, it is better to consult a licensed professional for credit card debt consolidation. No matter what option you pick from those as mentioned earlier, but ensure that you are entirely repaying the debts on time and maintaining a debt-free life.
