Are you struggling to keep track of your credit cards? Juggling various payment dates and different balances can be tough.
But consolidating these repayments into one manageable monthly payment can help simplify your finances.
Let’s explore your options.
What can I do?
One option is to apply for a balance transfer card. This lets you transfer your outstanding credit card debts over to one credit card. You’ll be left with a single monthly payment, which you’ll pay until you clear the balance.
Consolidating this way can make your finances more straightforward to manage, as you’re replacing numerous credit cards with one.
Meanwhile, a money transfer card lets you shift cash directly into your current account, which you can then use to clear your existing credit card balances. You can choose where the cash goes, which is useful to consolidate other types of debt like a loan or overdraft.
Both balance transfer and money transfer cards can come with a 0% introductory period, which is another reason you might choose to consolidate this way.
Paying no interest for a fixed period means you’ll pay less overall, helping you clear your debts quicker. But keep in mind that once this promotional deal ends, interest can quickly mount up.
There is normally a fee attached to shifting the debt on to your new card. Weigh up your options and work out whether it’s in the long run to consolidate your debts in this way. Even if it’s not, it might be a price worth paying for simplifying your finances.
Depending on your circumstances and credit history, a debt consolidation loan might be a suitable choice. You may consider this alternative if you wish to borrow a sum of money to pay off a range of unsecured debts over a longer period.
For example, a homeowner loan tends to offer a larger sum than a personal loan or credit card as the money you borrow is secured against your property. You can find out more about this here.
Search without marking your file
If consolidation is the right route for you, shop around to find the best deal. You could approach your existing provider, as well checking money saving websites to compare what’s on offer.
A great way of doing this is through a soft search tool. This way, you can browse between deals to find a credit card or loan that you are likely to be eligible for without damaging your credit score.
The thing is, every time you apply for credit, your credit history is marked. And the more times you apply, the more likely it is that lenders will view you as desperate to borrow and be inclined to turn you down.
You can weigh up your options carefully without the added stress of the search appearing on your credit history for other lenders to see. Only you will be able to see it.
You should think carefully before consolidating your debts. On the one hand, having just one monthly payment can make your finances more manageable. But borrowing over a longer period of time might mean that you actually end up paying back more overall.
If you are beginning to struggle with your credit card payments, you should act quickly to avoid your credit history being affected. Consolidation might not necessarily be the right move for you.
Late and missed payments will leave a negative footprint on your file and this can affect your consolidation options. You should bear in mind that lenders typically offer better interest rates to those with a good credit history.
For more information on debt consolidation, check out our previous blog.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.