Monday, May 27th 2019


how to consolidate debt?

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27th Nov 2009 by Ellen Silverman

Through the debt consolidation process, one is able to merge debts and replace them with a single monthly affordable payment and relieves one from the burden of making several payments every month. With debt consolidation, one may lower the risk of having to deal with a number of persistent debt collectors. The most common ways to consolidate debt are:

Take advantage of credit card balance transfer rates
Consider transferring credit card balances to one card. Check the maximums on your cards and choose one with a low Annual Percentage Rate (APR). Make sure the APR is not higher for balance transfers. The good news about this method is that with a good credit rating, you may get a much lower rate than other forms of consolidation loans. Call your current issuer to ask what interest rates/APR they will offer you if you transfer balances from other cards over to theirs. But be careful - too many applications for credit in a short period of time can hurt your credit rating.

Use Home equity
If you are a home owner, several options may be available to you, generally at lower rates than credit cards or personal loans with the added advantage of possibly having the payments become tax-deductible.

The most common options include home refinance and home equity loans or lines of credit. With a home equity loan, you borrow against the value of you home, minus any other mortgages. There are two major types of home equity loans: a home equity loan that provides a fixed amount of money for a fixed period of time or a home equity line of credit allows you to borrow up to a pre-approved credit limit and can borrow again as you pay down what you’ve used. These loans can offer attractive rates and the interest may be tax-deductible if you itemize. Many issuers offer no or low closing costs for these loans. Use this option with care as you will end up with less equity in your home, which will take time to earn back.

Refinancing your home
You may also want to consider refinancing your original mortgage. Refinancing your home and taking out money to pay off bills (called "cash-out refinance") is yet another way to tap the equity in your home. If you can refinance at a substantially lower interest rate, you'll eliminate the high interest costs of the debts you pay off and you could even come out with a lower payment than you have right now if rates are low. Make sure you understand the total cost of refinancing and be aware of how much equity will be left in your home. Take any money you have freed up by paying off other bills and use that to create an emergency savings fund.

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18th Nov 2009 by Tom Lindmark

Consolidating debt means that you are taking two or more debts that you owe and combining them into one obligation with one payment. For instance if you owed money on five credit cards you might pay off all of them with one credit card - assuming you had a high enough credit limit on that card - and just make the single payment on that card going forward. The goal is to combine all of the payments into one that hopefully is lower. You also want to try and consolidate debt into one loan that has a lower interest rate than the multiple loans you are paying off.

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30th Oct 2009 In Finance 2 Answers | 5217 Views
Subjects: consolidate debt, debt,

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