The truth is that having any debt means you are financially beholden to a creditor and you can’t put your money in your own pocket until your obligation is met.
You’ve got several options when you make the decision to eliminate debt.
Otherwise that fresh start you're hoping for, with your credit card balances on 1 card, could just make a bad situation worse.
Here are the 5 best options for debt consolidation of credit cards, along with some advantages and drawbacks of each.
For some people, it’s a smart choice that gets your debts organized while potentially lowering your monthly payments. When you take out a personal loan for debt consolidation, you receive funds to pay off all of your existing debt, like your credit card balances and high-interest loans.
You then make a single payment to your lender, rather than having to make multiple payments each month.
Debt is costly and can prevent us from reaching financial goals (or at least prevent us from reaching them when we’d like to).
Some people consider credit card debt bad and mortgage or student loan debt good.
Advantages: It's quicker and easier to get a card or credit-line increase than a bank loan, says Bruce Mc Clary, spokesman for the National Foundation for Credit Counseling.
And a credit card is unsecured, so you're not risking assets.
Life can feel overwhelming when you’re saddled with loads of debt from different creditors.
Maybe you carry multiple credit card balances on top of having a high-interest personal loan.
At that point, the delinquency stops affecting your credit. Your credit suffers tremendously in the meantime, and since you’re still legally obligated to pay the debt, a debt collector can pursue you until the statute of limitations runs out in the state where you live.