Consolidating credit card debt good or bad
Borrowing money, even to consolidate debt, usually requires that you have a good credit score.Debt consolidation loan options for bad credit do exist, but the pricing and terms may not be as attractive.Nerd Wallet recommends visiting your local credit union first.Most credit unions offer their members flexible loan terms and lower interest rates than online lenders, especially if you have a low credit score.That means you’ll need to pay more than the minimum payment due to reduce the principal and make a dent in your overall debt.Since both types of loans are secured by your house, you could lose it if you don’t keep up with payments.
Finding debt solutions when you have bad credit is tough.
Consolidation works best when your ultimate goal is to pay off debt.
The four most effective ways to consolidate credit card debt are: This type of credit card charges no interest for a promotional period, often 12 to 18 months, and allows you to transfer all your other credit card balances over to it.
» MORE: The good and bad of home equity loans Pros: Back to top If you have an employer-sponsored retirement account, it’s not advisable to take a loan from it, since doing so can significantly impact your retirement.
However, if you’ve ruled out balance transfer cards and other types of loans, this may be an option for you.
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To do this, many or all of the products featured here are from our partners. Ideally, that new debt has a lower interest rate than your existing debt, making payments more manageable or the payoff period shorter.