How to Consolidate Debt

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Combine your debt into one manageable chunk to minimize interest rates.

To complete this How-To you will need:

Lower interest rates on your credit cards
A card with no interest for six to 12 months
A debt consolidation loan, home equity loan, or home equity line of credit
Discipline

Step 1: Avoid debt-consolidation firms

Stay clear of debt-consolidation firms. They can't do anything for you that you can't do yourself.

Tip: Remember: Debt-consolidation firms that advertise themselves as "nonprofit" are not necessarily free.

Step 2: Call your creditors

Call your credit-card companies and try to negotiate lower interest rates. Be persistent -- if they say no, ask to speak with someone else, or call back in a few weeks and ask again.

Step 3: Investigate new cards

Check around to see if you can get a new card with a promotional rate of six months to a year of no interest.

Tip: Read the small print! Don't sign up for a card that reserves the right of "no-reason rate increases" or "universal default," which means the company can raise your interest rates simply because you owe money to other creditors.

Step 4: Transfer balances

If your lowest-interest credit card has available credit, consider transferring other balances to that card. But do some number crunching first: Exorbitant transfer fees might make debt transfer pointless.

Step 5: Apply for an unsecured loan

Shop around for an unsecured debt-consolidation loan with a lower interest rate than that of your lowest-interest credit card. If you qualify for one, pay off your credit cards with the loan. Just be aware that they are nearly impossible to obtain in a tough economy.

Step 6: Apply for a home-equity loan

If you own a home, consider applying for a home-equity loan or line of credit; the interest you pay is often tax-deductible. Just make absolutely sure you can make the payments so you don't put your home in jeopardy.

Tip: Make sure the loan doesn't come with a prepayment penalty.

Step 7: Stop spending!

Put the brakes on unnecessary spending so you don't incur more debt while paying off what you already owe.

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Category:

Howto & Style

Tags:

• hothowtos
• debt
• interest
• rid
• smaller
• reduce
• get
• out
• money
• finance
• loans
• credit

[astayonix]

Using a HELOC to pay off your credit card is a horrible idea. Why would you want to play treat your home like a credit card? If you can't pay it, you lose your house. Never use securable debt (house, car, etc) to pay unsecurable debt.

[MonkeyBoy2194]

I always watch things that don't apply to me, I don't understand why

[traceyrmj2]

forward XXX forward

[traceyrmj2]

Where they're comment says: "u will die within X mins/hrs/days if u do not forward this", they're lying to you, cuz a comment canna (can't) do anything to you other than scare you. Optionally, foward this to any other video or put it on your video's Info-box to spead the word against the scam that meant my step-uncle had to change his eMail addresses.

[bluenose1006]

great stuff

[Tunade5]

There waz wii remotote in his car at 1:49 XD