If you’re in debt, repaying the money you owe quickly can save you big. The longer you carry debt, the more interest you’ll rack up. Debt consolidation is a good way to speed up payments. Consolidating the balances you’re carrying on different cards and loans into one amount can help you obtain a lower interest rate. This will save you money over time. Read on for your best debt consolidation options.
Execute a Balance Transfer
If you’re carrying debt on a card with a high interest rate, you could save big by transferring the remaining balance onto a new card with a lower rate. Some credit cards offer promotional interest fees as low as 0%. This can be beneficial in helping you conquer your debt faster. But, it’s important to have good credit, so that you can qualify for a card with a low interest rate. That’s why it’s important to be mindful, and remind yourself that the promotional 0% interest rate won’t last forever.
Tap Into Your Home Equity
If you’re a homeowner, you might be able to use your home equity to consolidate your debt. The risk is that if you don’t use your home equity responsibly, you may find yourself facing foreclosure. But if you’re careful, tapping into the equity of your home and then repaying yourself can be a convenient way to consolidate your debt.
To do this, you need to choose between: a home equity line of credit or a home equity loan.
Borrow from Your Retirement Funds
Borrowing from your retirement funds should be your very last means of debt consolidation. So, if you’re extremely desperate for money, you may want to research more about borrowing against your 401(b), 401(k), or pension plan at a low interest rate. The benefit of doing this is that it enables you to pay back your plan, rather than having to pay back a loan lender. The drawback is that you may be jeopardizing your retirement savings.
