Were you enticed by the perks of a store credit card this shopping season? Did you overuse your credit cards? Don’t panic—debt consolidation can help. Debt consolidation can reduce the amount of interest you’ll pay on your purchases and, in some cases, lower your monthly payments. Here’s what you need to know about debt consolidation.
You can consolidate debt through a balance transfer
Since most store cards come with an average APR of 24%, a considerable amount of your payments will go toward interest. To eliminate this, you can transfer the balance of your store card to your financial institutions credit card at a lower interest rate. At the start of the year, many financial institutions offer a 0% APR balance transfer offer, which allows you to save the most money while paying off your balance.
You can consolidate debt with a personal loan
If you don’t have a credit card that offers a special balance transfer APR, you can apply for a personal loan to consolidate your debt. Personal loan APRs are lower than many credit card APRs, which means you’ll pay less interest on the money you borrowed.
Here’s how much you can save if you consolidate $3,000 worth of debt that was attached to a 24% APR.
Debt consolidation is a great way to save money, by decreasing the amount of interest you’ll pay on the money you borrowed. When you consolidate debt, it’s extremely important to avoid racking up new debt with your old credit cards. Your store cards will be paid off, so it’ll be tempting to use your credit. Just remind yourself that the high interest attached to the card isn’t worth the price … even if it’s on sale.