Debt. Almost everyone has it. And if it’s student debt you’re talking about, we’re talking about almost 70% of students.
But if you’re drowning in debt, then you need an option for consolidating debt. Learn two great ways on how to do it below.
1. Get Help From Professionals
If you’re drowning in credit card payments and you really need help – there are some people that can help make some of those costs go away.
They can’t go back in time and make you not spend that money, nor can they make the whole debt disappear.
however, they may be able to negotiate lower interest rates or payment amounts with your lenders. With this plan, you won’t end up paying as much as you would, even though the amount you spent/owe doesn’t change.
That s one way to do it. You can also work out a plan where the agency or professionals pay off each lender for you. To make up for that, you pay them a combined fee for all your payments.
Paying once a month is less stressful and sometimes they can help you do that and help you save on interest.
How to Do This
You’ll have to find a credit counseling or debt relief program. You can usually find one through your bank, or by googling “credit counseling services”.
We’re not talking about any companies that claim they can “raise your credit score” for a certain amount of money. Those are scams – you should stay far away from those.
Cons of Working with Professionals
You’ll have to pay fees to the credit professionals for their work helping you. Otherwise, they wouldn’t be a business and wouldn’t be able to make money – not even enough to function.
Make sure you compare the savings vs the fees and make sure the situation is worth it for you.
To start, look into this option for relief.
2. Get a Balance Transfer Card
To understand how balance transfer cards work, you need to know about “credit utilization” rates. Say your available credit is $1000. That’s your max.
You only want your statement to have 30% of that, at any time. So that would be $300. When you use too much of your available credit/credit limit, it shows the credit score companies you’re not being responsible with your money.
Balance transfer cards spread out your balance over two cards instead of one so that your credit usage rate goes down.
There’s usually a fee, which amounts to maybe 10% of your total debt (the amount you’re transferring). Most banks have caps on their fees, so you won’t spend more than a certain amount.
Your combined payments on your original card and your balance transfer card may add up to what you were already paying, but it’ll be better for your credit score.
If neither of these options works for you, then you can talk to your bank about another way to work it out. If that doesn’t work, and you have no options for consolidating debt, it may be time to look into a bankruptcy lawyer.
Learn more about finances on our site.