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If you are walking on a thin rope trying to balance your debts because of loss of job, or other reasons Let us find ways to make them easier and less expensive.
If you have several debts like multiple credit card balances or a combination of credit card debts and loans it can be very difficult.
Let us view some options for consolidating the debts and lowering the interest rate.
1. Single card balance transfer
You move your existing credit card balances onto a single card that has a lower interest rate.
You can get a 0% introductory rate and if you pay off your debt before the end of the intro period, you won’t accumulate further interest.
You would require a good credit score to qualify for the best offers.
You can still do a balance transfer, even if your credit isn’t so great, but that would be with a higher interest rate.
2. A personal loan
A personal loan allows you to borrow money for any reason. You can take out a personal loan to pay off your debt.
The advantage of personal loans is that they’re repaid in equal installments, so your payments on your loan are fixed and predictable.
Here too if the credit score is good, then you can expect a lower interest rate. There are personal loans for borrowers with lower credit scores also.
3. A cash-out refinance
A cash-out refinance allows you to borrow more than your existing mortgage balance.
The excess cash can be used for any purpose. With the current low refinance rates a cash-out refinance is a good way to consolidate and pay off debt where you might save reasonably better than a credit card or personal loan.
A decent credit score and enough equity in your home will help you to qualify for a cash-out refinance.
Consolidating debt is ideal to avoid situations like forgetting to make a payment and harming your credit score in return.
Spend some time to explore these options for consolidation and identify which is the best option for you.
Reference Source: The Ascent
