It's pretty well-known that consumer debt is a huge problem in the world today. With the convenience of being able to swipe a credit card and take out a loan, debt is becoming more and more mainstream. With the holiday season coming, it's even more “popular” to look into loan options for your Christmas holiday shopping.
But no one ever tells you about what happens after you take out the loan: you get slapped with extra fees and high interest rates. You’re also expected to pay massive “minimum” payments each month that you may not be able to afford.
So, if you're sick of debt looming over your finances, what's the next step to getting debt-free! Consolidating your debt is a lot simpler than you might think!
Related: Ready to change the way you think about money? Check out these 3 tips to get less stressed about your finances!
If you think about it, having multiple credit cards means more than one payment per month and interest fees. Juggling different limits, due dates and interest rates also requires a lot of organization we generally don't put in the effort to set up.
So, how do we eliminate all of this excess cash spent on fees? Consolidate your debt. First, look for a credit card with a high credit limit that can absorb all of your credit cards. This may take some research, but it'll be well worth the trouble.
As our last point observes, you shouldn't just use any old card! You need to find a credit card that not only has a high spending limit, but also has a 0% APR, no hidden fees, and a 0% transfer rate. Well, that's a tall order. And what do all of these words mean? We've broken them down here:
A high spending limit basically means that you will find a card that approves you to spend a large amount of money on this one card alone. Since you are using this card to consolidate, you may want to look for one with a spending limit of at least $5,000, or maybe even more, depending on how much debt you have.
The next thing to look at is APR. APR stands for annual percentage rate. This is your interest rate over an annual period, or 1 year. If the APR is 0%, this means that you will pay no interest on your purchases.
This seems great, but can sometimes last for a designated period of time; this is what you want to look for. Some credit cards will have 0% APR for 6 months, while others may offer it for an entire year. If you open a credit card to consolidate credit, you need to find one with no interest in order to avoid more debt.
Finally, you need to look for a credit card with 0% transfer fees. This is where the consolidation action actually comes into play. You can use this card to absorb all of your credit card debt and pay that off, interest-free. When you transfer all of your credit cards onto this one, you also will eliminate the stress of having out multiple lines of credit.
Choosing the right card to consolidate your debt will help you not only manage your finances more efficiently but eliminate interest fees as well. If you have multiple lines of credit, for example, that means you could be paying up to 50% in interest fees.
At that rate, you will never get your payments down to 0! Turning all your combined debt into one low, easy monthly payment can help you get all your debts paid off without pesky interest and hidden fees getting in the way. And that's worth considering. Getting debt-free could help you use your money for savings instead!
If you find that you're still struggling to make final payments before consolidation, you may want to take out an Idaho payday loan. This can provide you with quick, simple cash, without placing you into further debt.