Consolidating credit cards pros cons
After that, the interest rate jumps to whatever the card typically charges, which usually is somewhere between 16%-20%. The second option, a personal loan, is unsecured and might be harder to obtain.To make this strategy work, the borrower must be able to pay off the card balance during the no-interest grace period. Since unsecured loans pose greater risks to lenders than loans that use collateral, they generally come with higher interest rates, though seldom as high as rates on unpaid credit card balances.If you’re considering consolidating your debt with your home equity, consider a Figure’s Home Equity Line.Combining the best characteristics of traditional HELOCs and home equity loans, our unique home equity solution offers a fixed interest rate and full access to your funds up front, while still enabling you to make additional draws once you’ve repaid your balance.If you’ve fallen behind and the amount you owe is growing each month, it’s time to make a plan and regain control.Consolidation and refinancing are two of the most common ways to reduce credit card debt.That's exactly what you'll find at American Consumer Credit Counseling (ACCC), a non-profit organization dedicated to educating consumers about paying off debt and living life debt free. At ACCC, we offer free credit counseling sessions where you can learn more about working with debt consolidation agencies, about debt consolidation advantages and disadvantages, and about the many other ways of paying off your debt.Our credit counselors are certified and highly experienced.
There are two ways to tap into your home equity to pay off other debt: a home equity line of credit (HELOC) and a home equity loan.
The first, debt consolidation, usually requires getting a loan that can be used to pay off high-interest credit card debt.
The loan can be a secured, for instance a home equity loan or line of credit, or unsecured, a personal loan that a borrower can obtain from a bank, a credit union or an online lender.
Here are points to consider before seeking a consolidation loan.
Lower, fixed interest rates and an extended repayment period are the big pluses.