Credit cards can be useful financial tools. They allow you to borrow money to cover purchases now, with the agreement that you’ll pay the money back later. They’re also incredibly easy to misuse - if you don’t keep track of your purchases, you could be facing large credit card balances that are difficult to pay off down the road.
If you’ve found yourself dealing with more credit card debt than you can handle, you may consider reorganizing your debts through credit card consolidation. Although this strategy can help combine your debts into a simpler monthly payment, it comes with consequences and considerations that should be kept in mind.
What is Credit Card Debt Relief
If you have taken on more credit card debt than you can handle, you may need credit card debt relief. There are different methods available to relieve you of your credit card debt, and one of these is known as debt settlement.
Debt settlement typically includes lowering your monthly payments, consolidating multiple debts into one, and a repayment plan that shortens the amount of time it would take for you to resolve the debt on your own.
You May Need Credit Relief When:
- Your monthly payments are too high
- Your credit cards are maxed out or your utilization is over 40%
- You have missed a payment or multiple payments
- Your debt is interfering with your basic needs
- Your debt is affecting your mental health
Credit Card Debt Relief Options
Besides managing your finances on your own, these are the four most common debt relief strategies:
- Debt consolidation through a loan or a new credit card
- Debt consolidation through a debt settlement program
- Debt management and credit counseling
There isn’t a “one size fits all” option when it comes to debt relief. It’s important to consider your unique financial situation and research all of your options before committing to a new plan of action.
How to Consolidate Credit Card Debt
Credit card consolidation works by combining all of your outstanding credit card balances into one monthly payment. This can be accomplished in a few ways:
- Transferring existing balances to a new credit card
- Taking out a personal loan to pay off card balances
- Working with a debt relief company on a credit card debt relief plan
Combining your multiple existing debts into one debt allows you to focus on one payment rather than juggling several accounts and due dates. Depending on the consolidation method you choose, you may also be able to secure lower interest rates. When working with a debt relief organization, your debt negotiators will likely be able to negotiate settlements that are lower than what you originally owed.
If I Consolidate My Credit Cards, Will It Hurt My Credit Score?
Like many debt relief options, your credit score may drop when you consolidate your credit card debt. A major factor in your credit rating is credit utilization - this is how much of your credit you’re currently using, and how much is still available for use. By carrying large credit card balances, you’re increasing the amount of credit being used, and likely causing your credit score to drop. However, as soon as you begin to reduce your credit utilization, your credit score should begin to increase.
Fortunately, credit scores can recover over time if you practice good financial habits and pay down your debts. If you make consistent monthly payments, pay more than your minimum and avoid putting future purchases on credit cards, your credit score will likely improve.
Credit Card Debt Consolidation FAQ
How much credit card debt can I consolidate?
The amount depends on which consolidation method you choose and your current creditworthiness. For example, debt settlement is usually best for people who have $10,000 or more unsecured credit card debt.
Will consolidating my credit card debt save me money?
Yes! Results are not guaranteed, but most people save significantly more when they consolidate their credit card debt. Contact a Certified Debt Specialist at Accredited Debt Relief to find out how much you could save.
How will consolidating credit card debt affect my credit?
Your score may temporarily go down if your lender does a hard inquiry or if you decide to pause payment during a settlement negotiation. However, it can improve if you practice good habits after your consolidation.
Accredited Debt Relief: The Best Way to Pay Off Credit Card Debt
Accredited Debt Relief has helped customers across the country simplify their finances through credit card debt consolidation. With an A+ BBB rating, we offer customized financial solutions that can help you pay off your credit cards quicker. Our experienced team can help lower your monthly payments while debt negotiators work to reduce what you owe. To learn more and receive a free, no obligation consultation, contact us today.