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Consolidating your credit cards

consolidating your credit cards-88

This helps eliminate mistakes that result in penalties like incorrect amount or late payments.

consolidating your credit cards-12

If you’re thinking of consolidating credit card debt and you need an expert opinion to make sure it’s the right choice for you, we can help. With a debt management plan, you make one payment to the credit counseling agency, which distributes the money to your creditors until they are paid in full.Even if they are members of such organizations, though, be picky. So while the agencies and employees vary, the plans are all structured the same way: Your counselor determines how much it will take to pay your creditors in full in three to five years.The agency should be organized, send payments and statements on time and offer strong consumer education and support. The payment is usually around 2.5 percent of the total debt, though in hardship situations, there is some wiggle room. Why consolidate bills if you can't pay for basic expenses or if there are better alternatives?You can stop the plan at any time, and you can also pay more -- and get out of debt faster -- when you have extra funds. You wouldn't, which is the reason consolidation begins with a counseling appointment where your entire financial situation is assessed.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.

The option that best suits you depends on your overall debt load, credit score and history, available cash and other aspects of your financial situation, as well as your self-discipline.

Consolidating credit card debt is an invaluable way to solve challenges you may be facing with high-interest debt.

You can lower your interest rates and your monthly payments, meaning you can get out of debt faster even though you pay less each month because you’re managing and eliminating the debt more efficiently.

Debt consolidation is a third-party payment system. Agencies range in quality so make sure you shop around. Most debt consolidation plans are structured the same way. They ensure member agencies pass rigorous standards set forth by the Council on Accreditation or another approved third party, and that their counselors pass a comprehensive certification program. Financial institutions don't give preferential treatment to any one organization, nonprofit or otherwise.

However, if you just happen to have accounts with creditors that don't offer any concessions, that benefit is reduced. Look for a nonprofit credit counseling organization that belongs to either the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA).

Most issuers charge a balance transfer fee of around 3%, and some also charge an annual fee.