When you are setting up a debt elimination plan, you need to decide what debt elimination techniques you are going to use. Some techniques work well, others hurt your credit. Ideally, stay away from things that can hurt your credit. For example, don’t purposely miss credit card payments so that you can settle some of the debt. This will only damage your credit and make things more difficult. Fortunately, there are other methods you can use that will speed up the process without hurting you.
One of these such methods is credit card debt consolidation. This is the act of bringing several loans into one. One benefit is that it should reduce your monthly payments. If you’re struggling to make your payments, this will help you out. It could even help you avoid needing to declare bankruptcy. If making your payments is no problem and you’re trying to pay off the debt as fast as possible, consolidation can still help you.
In order to use consolidation to your best advantage, make sure you get the lowest interest rate possible on the new loan. One way is to transfer your balances to a new card that has a 0% transfer for a significant period of time. For example, if you can get 0% for 8 months, and you think you can pay it off that fast, you’ll be able to go interest free for the rest of the time you owe money. That can save a lot in interest. You can also find consolidation loans just for this purpose.
Try not to bring any loan to a lower rate. For example, if you owe $1,000 on a card with 8% interest, don’t consolidate it with other debt into a loan with 12% interest. You’ll only get more interest accrued. Unless it’s going to reduce your minimum monthly payment and you need that, you’re better off saving the interest.