QandAs: Loans

What is Credit Card Consolidation?

Answer:
Credit card consolidation is an easy way to

payoff high interest credit cards, manage debt, and restore a low credit score. Credit card consolidation is a simple concept. Let's say you have three high-interest credit cards, and each card holds a $1,000 balance.

If you were to make only the minimum monthly payment, it would take several years to lower the balance. On the other hand, if you were to consolidate, or combine the three credit card balances, and pay one low-interest rate, monthly payments will be lower and you'll be able to reduce the balance quicker.

There are various ways to consolidate credit card debt. Some credit cards offer balance transfer options, wherein cardholders can consolidate their high-interest debts and receive a low or zero percent introductory rate for the first six to 15 months. If you own a home and have satisfactory credit, consider a home equity loan or mortgage refinance. Both finance options let homeowners borrow cash from their equity to payoff or consolidate their credit card debts. If you do not own a home, but have good credit, ask about a secured credit card consolidation loan. To qualify for this type of consolidation loan, borrowers must provide adequate collateral and have enough funds to repay the loan.


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