Colliding Cards: Consolidating Credit Card Debt

If you feel like you are pounding down with various credit card balances, consolidating debt is a way that leads you to breathe free from your financial misery.

Consolidating your credit card debt can result in large savings. Instead of paying high-interest rates and multiple payments every month, you can get a lower rate and repay your debts with a monthly payment.

How to consolidate credit card debt? First, you decide whether you want a new loan, a new credit card, or a debt management plan. And then, you will use it to pay off your multiple balances whatever option you choose.

What you should know about the Consolidation of Credit Cards

You may want to consolidate your debt if you are tired of paying multiple credit cards every month. To do this, you will probably have to borrow money and pay off the cards.

Ideally, you would then have a single payment with a lower interest rate than your credit card debt, so that you would pay less interest while the debt is paid.

But it’s complicated to decide where to borrow the money and get approved for the loan or arrangement. There are many ways in which credit card debt can be consolidated and each has its advantages and consequences. Read on to find out if you want your debt to be consolidated and which method is best for you.

Picking the Right Way

Based by Louis DeNicola there are ways to consolidate your credit card debts that may suit your taste or your situation. Have a plan and you want to consolidate your debt. There is no “best “option, but some people may be less risky or better suited to your situation.

Nonprofit Credit Counseling Organization

Credit advice organizations are often not-for-profit organizations that provide advice to people and help them create plans to pay off their debts. Look for an accredited National Credit Counseling Foundation if you are considering this route.

Personal Loan

You can find personal loans from banks, credit unions, and online lenders. Your credit can be a factor in determining your eligibility and your loan interest rate.

Balance Transfer Credit Card

Balance transfer credit cards usually offer an initial interest rate of 0 percent on balance sheets, which you transfer to the card within a certain time period. and sometimes even on purchases.

Loans or Withdrawals from a qualified Pension Account

If you put money into a retirement account, such as an employer-sponsored 401(k) or an IRA, you could use that money to pay off your debts.

401(k) plan is a defined contribution plan where, depending on the options available in the program, an employee may make paycheck contributions before or after tax.

An Individual Pension Account (IRA) is a government-sponsored personal pension plan that is tax-deferred. Taxes on IRA contributions and earnings shall be deferred until the account owner receives an IRA distribution. When money from a traditional IRA is withdrawn, it is taxed as a regular income.

House or Car Loan

You can use a cash-out refinance or HELOC to take money from your home or vehicle. Banks, credit unions and online lenders offer consumers these options.

HELOC stands for the credit line of home equity or simply the “home equity line”. It is a loan set up as a credit line for a certain maximum draw, rather than a fixed dollar. For example, you could borrow $150,000 from a standard mortgage, which would be paid in full at the end.

Borrow a Friend or Family Member’s Money

Referring to relatives or friends for cash really puts you to personal financing. Proceed cautiously. Hence, No credit check exists, and you may be able to get a lower interest rate than a financial institution offers you.

But you jeopardize your personal relationships and possibly endanger the finances of the other person if you cannot pay them back in the future. You may also expect the other person to reciprocate when they need help.

Guard Yourself Against Harm

Check with renowned lenders. You could provide some sensitive information just like your social security number and birth date when applying for a loan. These items can be used for theft of identity, so you only want to pass on these details to a trusted company. Search providers online and ensure that all web pages with which you work are encrypted.

Some “creditors” do not want to steal your identity–they just want your money. Consider debt consolidation services that require heavy charges or continuous service charges. As described on the previous page, your best bet is a standard loan from a bank, credit union or online lender.

Note that some services of debt consolidation “will not consolidate the debt. They will instead negotiate with your creditors and possibly handle for you “payments. Although some of these debt management services are legitimate, they are not the same as consolidation services.

Finally, remember that student loans from the federal government have certain benefits other lenders cannot offer. If you switch federal loans to a private lender, you risk losing some of these benefits according to JUSTIN PRITCHARD.

After you Consolidate your Credit Card Debt

Once your loan is funded, immediately send that money to your credit card company. It can be tempting to spend what looks like free cash, but the reality is that you are more rooted in debt than you used to be.

After paying off your credit cards, avoid debt collection on these cards. You will suddenly have a balance of zero or lower than it seems, so it may seem that you can spend freely. Again, you haven’t paid off any debt–you just moved it to another location.

Do everything you need to avoid spending on these cards: freeze them in an ice block or If you need to send them through the shredder. Delete or forget the number of your card so that you can’t shop online.


It is essential to understand that each strategy has its advantages and disadvantages and that each person’s best solution varies. Your situation can differ considerably from the examples given.

A good first step is to check your credit report to find out where your credit is and how much you owe it in general. Then you can choose which of the different payment options for credit cards are best for you.