Mistakes To Avoid If you want or need to consolidate, be aware of the following..
Don't use a home equity loans, says Roberta Lee-Driscoll, a certified financial planner in Honolulu; “if someone has five credit card debts and they consolidate it into a home equity line of credit that is a no-no.” That's because credit card debt is considered unsecured debt, meaning – there is no collateral to back it up.
Continue Reading Before agreeing to any consolidation plan, read the details carefully, as they may involve increased costs, extra fees and high interest rates, recommends the Consumer Financial Protection Bureau. Department of Justice provides a list of approved credit counseling agencies on its website.
Also, consult a nonprofit credit counselor to explore alternatives before signing a contract.
You should get free debt advice before you consider taking out a secured debt consolidation loan, as they’ll not be right for everyone and you could just be storing up trouble or putting off the inevitable.Credit Counseling offers one of the most common and legitimate ways to get your credit card bills reduced and under control with a single consolidated monthly payment.There are benefits and drawbacks to working with a credit counseling service.Options to consolidate your credit card and other debts include a balance transfer credit card, an unsecured personal loan, a home equity loan or line of credit and a 401(k) loan.
This type of credit card charges no interest for a promotional period, often 12 to 18 months, and allows you to transfer all your other credit card balances over to it.
You’ll need a good to excellent credit score — above 690 — to qualify for most cards.