Pros and cons about consolidating credit cards

Personal loan: For most borrowers, interest rates on debt consolidation loans are lower than rates on regular credit cards.The rate you get depends on your credit history and income.A homeowner with shaky finances shouldn’t move unsecured debt that can be erased in bankruptcy to secured debt that can’t. That’s the maximum time you’d be required to make payments toward Chapter 13 bankruptcy or a debt management plan — after which your debt would be fully retired.

For some, the psychological benefits of having a simplified, consistent monthly payment are enough to warrant a debt consolidation strategy.Pros: HELOCs are second mortgages structured like credit cards.Instead of getting a lump sum, you draw down money you need — to pay off credit card balances, for example — using checks or a debit card linked to the credit line.Contact the Federal Trade Commission (FTC) or the National Consumer Law Center for free information on debt negotiation and debt negotiators.Either strategy can have lasting impacts on your credit score, so be sure to weigh the pros and cons carefully before undertaking debt consolidation or debt settlement.

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MORE: Calculate personal loan rates If you’ve ruled out other options, weighed the pros and cons of consolidating with home equity and determined it’s the viable path, then it’s a choice of a home equity loan or a HELOC.

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