4. Consolidate Your Debt with the Right Credit Card
Most people aren’t aware that they can consolidate all of their debts with a credit card. It sounds too good to be true, but it’s possible. They are called balance transfer credit cards, and they allow you to move the amount of money you owe from one card to another.
Almost every credit card allows for balance transfers, but there is often a catch. They have fees attached to them in most cases. However, you can look for no-fee or low-fee balance transfer cards. That way, you could move all of your debt from a high-interest card to your new low-interest credit cards.
If you are re-establishing credit, you always want to choose cards with low interest rates and no annual or monthly fees. That way, the debt you spend from the card is going toward purchases and not extra costs to have the card.
Keep in mind that some high-end reward cards do have annual fees. These are normal because you get so much in return. This could be an option for you, especially if you already use the rewards they provide. Cash-back is the most sought-after reward, but you can get merchandise, free airline miles, and many others.
Those who are trying to consolidate debts without doing a bankruptcy could benefit from balance transfers. If you can’t get a zero percent APR, choose the card with the lowest interest rate and the highest limit. That way, it’s possible to move the higher interest amounts to that one. Ultimately, you want no balance on any other credit card you own. Any with annual/monthly fees should be canceled so that you don’t have to pay them all the time.
Now, you’re focused on a single credit card and can pay more each month to cover the interest and more of the principal. This is where a zero-percent APR comes in handy. Whatever you pay each month goes directly to the principal, helping you pay the card off sooner
