Ways to consolidate debt

Having too much debt can cause a load of problems. It can make it hard to save money and get loans, and it also can lower your credit score. Consolidating your debt is a way to make it easier to pay off. There are a few ways you can go about consolidating your debt to save money.

 

Balance transfer

If most of the debt you have is credit card debt, then you can easily consolidate it by doing a credit card balance transfer. A balance transfer allows you to transfer one or more credit card balances onto another card. The advantages include getting a lower interest rate and reducing the number of monthly payments you have. Disadvantages include a balance transfer fee and the fact that low interest rates may not last long enough to pay off your debt.

 

Home equity loan

If you own your own home and have equity in it, you can borrow against that equity to pay off debt. The big advantage to this is that home equity loans have very low rates compared with other types of loans, so you will save a lot of money in finance charges. The big drawback is that the loan is secured by your home, so if you can't pay it for any reason, the lender can place a lien on your home and try to foreclose on it.

 

Personal loan

A personal loan is another viable option for debt consolidation. An advantage to a personal loan is that you don't risk any collateral. Though personal loans have higher rates than other loans, they typically have lower rates than credit cards. A big drawback to personal loans is that you typically can't borrow that much money and don't have a long period in which to pay off the loan.