If you have credit card debt, the interest you pay each month could be as high as 20-30%, making debt payoff much slower (and more expensive) than you ever imagined.
But there could be a way to save!
How to consolidate debt
Here are 3 debt consolidation options that could help you pay down your credit cards faster 💸
Step 1: Find Your Credit Score
👉🏾 First, check your credit score for free at freecreditreport.com.
Consolidating your debt usually requires a credit score that is at least 'good' (670 or above).
If your credit score is lower than 670, work to pay down your debt, which will boost your score, and then consider one of the consolidation methods below once your score is higher.
Step 2: Decide if a Balance Transfer Credit Card is a safe option for you
A balance transfer credit card offers a 0% interest rate on new balances transferred to the card, but that rate expires within a certain timeframe (usually 12-18 months), at which point the interest rate will jump up to as high as 18-25%. A fee of 3-5% will apply.
A personal loan will have an interest rate depending on your credit score, so it could be much lower than your credit card interest rate but will still charge interest. A fee around 6% will apply.
⚡To decide if a balance transfer card is okay for your situation, ask yourself these two questions:
Q1. Can I fully commit to paying off the balance transfer card within the promo period?
The minimum required monthly payment will likely not get you to paying off the balance in full before the promo period ends, so that you'll be hit with interest charges after the 12 or 18-month promo period. Therefore, you'll have to commit to making higher payments every month (and sticking to it) in order to pay off your balance in full before the promo period ends.
Q2. Can I commit to NOT using the new credit card if there's room available on it?
Oftentimes, a balance transfer offer includes a 0% introductory interest rate on the transfer but NOT on any purchases made, which could be charged as high as 24.99% interest.
If you answered no to either of the questions above, a personal loan or consolidating with Tally might be better for you! See below for details.
Step 3: Choose your path below, and take action!
Option 1 - Balance Transfer
Transfer existing credit card debt to a new card that offers 0% introductory interest rate for 12-18 months, and usually a small fee (3-5%) on the balance transferred.
👉🏽 Calculate how much a balance transfer could save you in interest, and how much you should pay monthly to pay it off in full by the end of the promo period: Balance Transfer Calculator
Option 2 - Personal Loan
Take out a loan to consolidate debt into one monthly payment and a lower interest rate than you are currently paying. You'll have a fixed interest rate, which will depend on your credit score, and a fixed monthly payment.
Some lenders charge fees for processing your new loan, up to 6% of the balance. This fee may be wrapped up into the loan amount, meaning you'll pay interest on it as well. You may also be subject to a prepayment penalty if you want to pay off the loan early. Read the fine print before accepting a loan offer!
👉🏽 Calculate how much a personal loan could save you in interest: Debt Consolidation Calculator
Option 3 - Lowering Interest with Tally
Don't want to get another credit card, and want to avoid the fees of a personal loan? Tally can give you access to a lower interest line of credit, getting you out of debt much faster and saving you over the repayment period. Not everyone is eligible, but it doesn't hurt your credit to check the rate you would be eligible for with them.
You can learn more about how Tally works here.
Don't do debt alone
For more help or guidance, get in touch for a FREE session to talk through your debt.
