If you’re battling high-interest rates and large balances on multiple credit cards, it might be time to consolidate your credit card debt. This is basically taking out another form of credit, at a lower rate, to pay off your existing high-interest credit card balances leaving you with a single, easier-to-manage monthly payment. It all begins with shopping around to compare lenders and rates to find the lowest rates for the most effective credit card consolidation.
According to the 2020 Annual Financial Literacy Survey conducted by the National Foundation for Credit Counseling (NFCC), 62% of adults have carried credit card debt in the last six months. Nearly 6 in 10 find it difficult to minimize their debt primarily due to unexpected financial emergencies or a reduction of income. If you are struggling with credit card debt, here are three ways to consolidate.
1 Consolidate debt with a low-rate personal loan
A low-rate personal loan is a great option for consolidating credit card debt. It’s a fixed-rate installment loan that enables you to pay off the loan with a set monthly payment. Choice One offers members a personal loan rate as low as 3.25% APR*. You can borrow up to $10,000 up to a term of 72-months. It’s an ideal way to consolidate higher-interest debt and lower your payments, especially if you are juggling multiple high-balance credit cards. Best of all, you can apply for a personal loan right online. It’s fast, easy, and convenient.
2 Consolidate debt with a home equity loan
Another type of loan that can help you consolidate high interest credit card debt is a home equity loan. The interest rate on a home equity loan for borrowers with good credit can be competitively low. The money is secured by the borrower’s home and is paid back through fixed monthly payments. An example of how low home equity loan rates can be as compared to higher rate credit cards is Choice One’s fixed home equity loan rate, which is as low as 2.49% APR*. This rate is for terms up to 58 months. If you’re paying close to a 20% rate on your credit cards, imagine the savings. If qualified, Choice One will allow you to borrow up to 80% of the value of your home. Tap to see home equity loan rates and terms.
3 Consolidate debt with a balance transfer credit card
Balance transfer credit cards often provide borrowers with special low introductory rates for a limited period of time. Such is the case with Choice One’s VISA Credit Card special 2.99%* rate for six billing cycles. With the lower interest rate and no balance transfer fee or annual fee, you can save money instantly. Since you’re paying no interest, even for a short period, all of the money you pay towards the balance during this period goes directly towards paying off the principal. Consolidating multiple cards into one card also provides you with a single monthly payment. The trick to effectively paying off your credit card debt this way is not charging up the cards you pay off.
Benefits of consolidating high-interest credit card debt
Consolidating multiple credit card balances into one lower-rate credit card or loan will not only lower your interest rate but possibly reduce your monthly payment. Focusing on a single payment each month might enable you to pay off your debt faster and more efficiently.
Refinance and Save at Choice One Community Credit Union.
*APR = Annual Percentage Rate. Rates shown are for qualified borrowers based on creditworthiness and are subject to change without notice. Rates for Home Equity loans and Personal loans include a .25% discount for auto deduct from a Choice One share or share draft account. Contact the credit union for complete details and current rates.
**2.99% VISA Balance Transfer Rate is valid for 6 billing cycles from the date of transfer. Rate returns to the current rate at that time. Choice One’s current Platinum Visa Credit Card Rate is 8.90% APR and Classic Visa Card is 13.50% APR with No-Annual Fee. Balance Transfer offer is good on any new or existing Choice One Platinum or Classic Credit Card. 2.99% balance transfer rate is for balances transferred from another institution only. Transfers may not exceed the credit line a member is approved for.