Home Loans

The high interest rates associated with credit cards and the ease of which you can incur more debt with credit cards makes them bad debt. If you find yourself unable to pay off your credit cards, it may be time to consider consolidating your credit card debt. Here are ten easy steps to take.

1. Consider your options
Taking out a debt consolidating loan sees you taking out one large loan to cover the smaller debt that you have, such as credit cards and overdrafts. This loan does come with interest (usually lower than most small debt options come with). Before beginning this process consider if you really need it and if there are easier alternatives.

2. Make more payments
Where possible make more payments into your credit card. Plan how many payments you will need to make to over the next 12 to 18 months to pay off all your credit card debt. This is the cheapest option as each payment that exceeds the minimum amount, reduces the interest you owe on the card.

3. Consolidation loan
If you are unable to even make the minimum payments on your credit card, then a debt consolidation loan will help. There are numerous options available to you. A home loan or re-financed home loan basically sees you take out a bond with low interest to cover your debt. A secured loan for consolidation means you get all your debt paid with low interest debt, but you need to sign over some collateral (such as your home or car) than can be repossessed if you default on even just one payment. An unsecured loan is similar but without collateral and is repaid over a shorter period. The installments on this are higher because of the repayment period.

4. Credit Card consolidation
Sometimes a low or zero interest credit card can be taken out with a different financier to consolidate your other credit card debt. The balance of your debt from the credit cards is transferred to this new credit card whereby you are given a certain amount of time (usually 6 months) without paying interest. Best pay off the debt before you accumulate interest as it could make your situation worse.

5. Generate extra income
Before considering to take out a consolidation loan or apply for debt counseling, why not think of ways to generate more income such as selling some assets that you don’t use. Whatever money you earn from this second income should go straight into your credit cards to pay them off quicker.