Understanding credit card consolidation is key to benefitting from it rather than suffering because of it. Whatever your reasons for wanting to consolidate your credit card debt, you should always make sure you get a lower overall interest rate and the shortest repayment period possible.
These two attributes can make consolidation worthwhile. You’ll hit the trifecta if you can lower your monthly payments too. Knowing what questions to ask when seeking credit card debt consolidation increases the likelihood of your success in this regard.
Let’s take a look at some of the most important queries.
1. What is my Credit Score?
This factor is key to getting a favorable interest rate. The higher your score the better the rate for which you’ll qualify. The lower the rate, the better the chance you’ll come out ahead doing a consolidation. You can get your credit score by requesting it from one of the three reporting bureaus (Experian, Equifax, and TransUnion). While investigating your score, you should also review your credit reports, which you can get free at AnnualCreditReport.com. Look for discrepancies and get them cleared up before you apply to help improve your score.
2. Will I Save Money?
The overall efficacy of credit card debt consolidation is predicated upon your ability to get more favorable terms than the ones under which you’re currently servicing your debt. The only way to figure this out is to get a handle on exactly how much you owe, what the interest rate is on each of those debts, and the total amount you’ll need to pay them off in full. With those numbers in hand, you can use a debt consolidation calculator to decide whether making the effort is worthwhile.
3. How do I Find a Reputable Partner
The best place to start is with your credit union or the bank with which you currently do business. There are a number of online entities offering credit card debt consolidation advice and loans. Before you take what they say as gospel, do a bit of digging around online to get a feel for their reputations. Run searches for the names of the organizations with the Better Business Bureau. Check with the office of the district attorney in your state to see if they’ve had any cases filed against them for malfeasance.
4. How Much Will Consolidation Cost?
Fees can vary according to the amount of debt you consolidate and the method of consolidation you choose. Balance transfer credit cards for example will charge a percentage of transferred amounts in fees. Home equity loans will fluctuate with the market in terms of interest rates — you’ll also be looking at many of the fees that go along with applying for home loans. Personal loans will cost less to originate but will have higher interest rates because they aren’t secured.
5. Why am I in Debt?
You must be certain you’ve solved the problem before you enact a solution. After all, if you have yet to address the predicating issue(s), you’ll repeat it/them. One of the worst things you can do in this situation is run up new balances on your credit cards before you’ve paid off the consolidation loan. You need to be real with yourself about how you got into trouble to ensure you stay out of trouble going forward.
Asking these five questions when seeking credit card debt consolidation help will position you to find success. After all, the whole point is to make sure you’ll come out ahead.