Making monthly bill payments for multiple loans and credit cards is not only difficult to keep track of, but you are also likely to end up paying more interest over time. One way to reduce how much you pay toward your debt is through debt consolidation. Here are the five best ways to consolidate your debt.
Get a 0% APR Balance Transfer Credit Card
You can transfer your credit card debts to a balance transfer card that offers a promotional APR of 0%. However, to get a balance transfer credit card at a low-interest rate, you will need to have a good credit score. If you successfully manage to get a 0% APR credit card, ensure that you pay off your outstanding balance during the no-interest period.
Borrow Against Your Home Equity
Homeowners who have built substantial equity in their home can tap into the equity they hold. Keep in mind that if you fail to make your monthly payments toward the home equity loan, the lender can initiate foreclosure proceedings and you may lose your home.
Get a Personal Loan
Personal loans have a fixed interest rate and offer a longer loan term, ensuring you can repay the loan amount over a period of time. What’s more, there is also no collateral at risk. To get a good offer for a personal loan, you should maintain a good credit score.
Tap Into Your Life Insurance Policy’s Value
You may also want to consider tapping into the value of your life insurance policy to consolidate your debts. However, remember that you should repay the borrowed amount since your family may be left with nothing in the way of policy proceeds if something unfortunate happens to you.
Borrow Against Your Pension Plan
As a last resort, you can also consider borrowing against your pension plan, 401(k), or 401(b). However, it’s best to avoid doing this since you will be putting your retirement at risk.
Debt consolidation can make it easier for you to manage your loan payments and reduce the risk of you defaulting on your loan. That said, before you consolidate your debts, make sure to compare your loan options and evaluate which creditor or lender will work best.