Less-Known Methods of Debt Consolidation
When we talk about debt consolidation, we immediately think of debt consolidation with bad credit loans or second chance loans, the most common tools used to this end. However, this is by no means the only method we can use to save money. We are free to consolidate debt in multiple ways. Some of them are more efficient, others not as much, but it never hurts to try. It all depends on the situation an indebted person is in at a particular moment.
In the following, we’ll present you 3 methods of debt consolidation you might not have heard about. Mind that all of these require the expertise of a professional banker or financial advisor. Do not make the mistake of doing any of these on your own, thinking you know better.
You can consolidate debt by:
Rolling your credit card debt into a personal loan
If you do this, you will benefit from a clean-cut repayment period, which doesn’t really happen with multiple debts on multiple credit cards. These debts can be added to a personal loan. You can save an almost unbelievable amount of interest by doing this. Credit cards usually charge higher interest rates than loans. Sometimes, with as much as 7%. If you do decide to exercise debt consolidation with this method, you must prepare for paying larger monthly repayments.
That’s okay, though, because you’ll dissolve your debt a lot faster. Since you’ll be getting considerably lower interest rates, you won’t need to lose sleep over the fact that you might need to pay twice or – God forbid – thrice the sum you’ve borrowed in the first place.
This method of debt consolidation is among the safest out there and there are no hidden strings attached. Just make sure you’ll get a good deal because it doesn’t make sense to consolidate a personal loan if there are no perks in it.
Roll your debts into your mortgage
Obviously, in order to use this debt consolidation method, you need to have a mortgage and sufficient equity. Like in the case of the first method, your monthly repayments will increase, but on the other hand, the amount of interest you’ll be paying will decrease. The next step you must take is to cancel all your credit cards. If you don’t, this method won’t be as effective as you may have hoped. This particular method has yet another perk to offer: you’ll be able to repay your mortgage in full a couple of years earlier.
Therefore, you’ll be saving money in interest on that, too. Two birds with one stone. Before you jump to conclusions, however, make sure you talk to a professional first. He’ll provide you tables with comparisons, so you know if it’s worth it. Needless to say, if rolling your credit card debts into your mortgage isn’t really that cost-effective, you shouldn’t do it. Take the time to find the best offer you can get.
Transfer the remaining debt onto a cheaper credit card
We’ve left this in the last place because it can take a toll on your credit score. Why? Because you’ll need to perform a couple of balance transfers in order to get rid of the old debt. These will show up in your credit history. Moreover, the new repayment plan will come with a limited number of months in which the interest rate will be lower. After these expire, the interest will return to its original amount. In other words, you only have a couple of months (depending on the policy of the new credit card), to dissolve that debt. Afterwards, the standard interest rate will be restored. Again, it is highly recommended to seek the advice of a professional.
He’ll be able to help you create a plan that won’t be rendered unusable, as well as a better plan to make the most out of those months. Due to the short amount of time you’re provided to clear out your situation and the fact that it can stain your credit history, this method of debt consolidation should only be used as a last resort.
You’re probably already familiar with this, but sometimes, debt consolidation just does not make any financial sense at all. Even though these 3 methods are always at the ready for you to use, you should refrain from using them merely because they exist and you feel like they’d do you a lot of good. Visit Debt Consolidation and find out whether consolidating your debt would be a good idea or not. If it isn’t, you might need to make use of other alternatives. Our team will help you find the solution to your problems, whatever those might be.
Whatever you do, just don’t jump straight to conclusions with no clue on what you’re doing. Make the right decision and talk to professionals first.