Credit card debt can quickly assume a life of its own and grow to an unmanageable level. If you have good credit but are buried in bills, you may qualify for a debt consolidation loan, which can roll several debts into one monthly loan payment. Debt consolidation loans may carry lower interest rates than credit card debt. Shop online or at your bank or credit union for finding an unsecured debt consolidation loan. These loans do not require collateral and may be called personal loans, signature loans or debt consolidation loans. Credit problems can nix your ability to qualify for a debt consolidation loan, but here are suggestions for consolidating credit card debt.
Borrowing from your retirement savings: Not all retirement plans provide for borrowing against accrued retirement savings, but if you have a 401(k) plan through your employer, you may qualify for borrowing against it. Discuss your plan's options with your human resources department. Beware of taking early withdrawals from a retirement plan as the IRS may assess an early withdrawal penalty.
Lump sum withdrawal from annuity or expected legal settlements: You've seen the ads featuring a person saying saying she needs her money now. Before engaging the services of a company for negotiating an advance settlement, be sure to check the price you'll pay for this service. It may be worthwhile to continue paying several bills than paying a third party a percentage of future payouts.
Additional possibilities include auto title loans or borrowing against home equity, but it's important to consider potential consequences for failing to repay secured loans. Always compare the annual percentage rate, or APR for debt consolidation loans against the current APR you're paying for each of your credit cards.
About the Author:
Karen Lawson is a freelance writer with 20 years of experience in mortgage banking, mortgage loan servicing, and home loan loss mitigation programs. She holds BA and MA degrees in English from the University of Nevada, Reno.