Sure, using credit cards to pay for everything is convenient. But if you run up balances on multiple cards, you can easily get overwhelmed with debt.
But don’t panic. If you’re looking for the best way to consolidate your credit card debt — and finally pay it off — you have a number of options.
Your options for consolidating credit card debt
Here’s a look at three of the best ways to consolidate your debt — which allow you to combine your balances and pay off your debt faster.
1. Take out a personal loan
If you need some time to pay down your debt, getting a personal loan might be the best way to consolidate credit card debt.
Using a debt consolidation loan, you’re still going to pay interest on what you borrow, but you might qualify for a lower interest rate. Your monthly payments might also be lower since they’ll be stretched out over a period of years versus months. But remember that, typically, longer loan terms usually means you’ll end up paying more in interest over time.
Your bank is a good place to start if you’re looking for a loan, but be sure to shop around. You might be able to snag a better deal through a credit union or an online lender. So, make sure you compare offers from multiple lenders to find the best options for you.
2. Transfer your balance to a new card
Many credit cards offer promotional deals like a introductory 0% APR on balance transfers — if you transfer your debt in a certain amount of time.
This can be a real money saver, but only if you’re able to get the card paid off before the promotional rate expires. If you can’t pay it off before then, you’re just going to be stuck paying high credit card interest rates all over again.
Keep in mind, though, that some cards charge a balance transfer fee on the amount you’re transferring over — typically around 2% to 3% of the total amount. So make sure you factor in the amount of the transfer fee to ensure it’s worth it.
3. Tap into your home equity
You could leverage your home’s equity to pay off your credit cards once and for all. With a home equity loan or line of credit you can lock in a lower interest rate and give yourself more flexibility when it comes to payments.
If you feel secure in your job or have a steady stream of income, tapping into your home equity could be the best way to consolidate credit card debt. But using your equity to pay off your debt is risky because you’re putting your home on the line as collateral.
If you can’t pay off the loan or line of credit, the lender could seize your home and sell it. You have to decide whether you’re comfortable taking that gamble before you commit to borrowing against your equity.
Read more: Best Personal Loans for Debt Consolidation
Bonus: Consider giving your credit cards a timeout
It’s important to ensure you don’t get stuck in a rut when it comes to your debt. After you’ve consolidated your credit card debt, you don’t want to end up running your balances up again.
It’s fine to use your credit cards if you’re responsible with them, especially since you can earn rewards for travel or cash back, but make sure you’re always paying each balance in full every month to avoid paying interest.
If you can’t pay your balances in full, try not to keep all of your credit cards on you at all times. If you do, you’ll always be tempted to use them (or overuse them). But make sure you keep the accounts open since closing them down could hurt your credit report.
Dealing with debt is always hard, but it’s good to know you have options. Credible simplifies your personal loan search by letting you compare rates from top lenders in minutes without affecting your credit score.
Rebecca Lake contributed to the reporting of this article.