There are different ways to achieve credit card debt consolidation. The first is through debt consolidation loans, the second is debt management or credit counseling and the third is balance transfer. Let us go through them one by one to understand your options.
Debt consolidation loans involve getting a loan that will help pay off your other debts. By removing the smaller debts, you consolidated all your credit obligations into a single payment – which is your new loan. The appeal of this type of debt relief program is the single payment scheme that makes it easier for the debtor to track payments. Another benefit of this is the lower monthly payments. Most of the time, loans stretch for 5 years. This will allow you to make lower monthly payments on your credit cards. The last benefit is the low interest rate – at least, you should have chosen a low interest rate loan. Credit card debt is very hard to get out of because of the high interest rate. If you get a personal loan or a secured loan (one with collateral), then you can get a low interest rate on that loan. Be careful in getting a new loan because if you cannot meet the payments, you may lose your collateral (if you chose a secured loan).
The second type is known as debt management or credit counseling. It is similar to debt consolidation in terms of the single and lower monthly payments. However, you do not need to take out a loan to accomplish it. You only have to find a debt management company who will assign a debt counselor to help you out. You will both review your finances to come up with a figure that you can consistently allot towards your debts. You will send your debt payment to the counselor who in turn, will distribute your payments to different creditors. The debt counselor will help negotiate with your creditors to allow a longer payment term that in turn will provide you with lower monthly payments. They can also try to negotiate for a lower interest rate and the elimination of penalty charges but this is not a guarantee. When enrolled in this program, you are not allowed to use your credit cards and you have to pay for a certain amount of service fee.
The last type of debt consolidation is balance transfers. This involves getting a 0% interest card that is usually an introductory promo. What happens is you transfer you high interest credit card debt to this card that you can pay with zero interest for at least 6 months. There is a balance transfer fee to consider and it depends on the amount that you want to transfer.
Each of these options are effective but you need a steady income to make it work. If not, better opt for another debt relief program to solve your credit card debt.