Consolidating credit card debt immediately after the new year is one of the best financial moves that you can make. According to the 2017 reports, Americans ended up with an average of $1,054 worth of holiday debts. That is quite a lot of debt to start off the year with.
While you may have enjoyed the festivities because of the money that you borrowed, it will make you start the new year on a negative financial note. If you want to improve your life next year, you need to make sure that you have a swift solution for the debt that you used during the holidays.
One of the fastest ways to deal with your financial situation is consolidating credit card debt.
Benefits of consolidating credit card debt
You may be wondering, why do I need to consolidate my credit card debt right now? Can this be postponed and accomplished a few months later into the year?
Well, there is nobody stopping you from doing that. However, the earlier you start consolidating debts, the better it will be for your family. It does not matter what type of debt you have or how much you owe. It is always better for you to start working on it as early as possible. So if you can start consolidating credit card debt once the new year celebrations are over, that is one task that you can already cross off your list.
Here are some reasons that will help you appreciate credit card debt consolidation more.
Study and organize your debts
Isn’t it a good idea to start the year on the right foot? This is what debt consolidation can give you when you choose to use it immediately after the festivities are over. When consolidating credit card debt, you are can simplify your debt payments. It is a great opportunity for you to look at all your credit accounts so you can organize them all. Since you will be consolidating them, you do not have to worry about keeping track of the payments. You can focus on other things like making plans to improve your financial situation this year.
Get rid of the high-interest rate debt
Credit cards are notorious for their high-interest rates. This is one of the reasons why people prefer consolidating credit card debt. If you get a low-interest loan or a 0% balance transfer card, you can save a lot of money on your payments. You can use that money to finance some of the financial goals that you have for the rest of the year. That way, you can hit a lot of goals – be debt-free and wealthier too.
Lower the financial stress caused by any holiday debt
Finally, consolidating credit card debt can help lessen the financial stress that is usually caused by debt. According to reports, money is still the biggest reason why Americans feel stressed. It is not hard to believe that debt plays a huge role in all that. If you cannot pay off your debt, it will be very hard for you to increase your personal net worth. This is why it is a must for you to find a debt relief option that will help you manage your debts. The report reveals that it does not really matter what economic situation you are in. Your finances will always make you feel a bit of stress.
Options to consolidate credit card debt
Now that you know why consolidating credit card debt after the new year is a really good idea, let us look at two of your options. There are various ways to consolidate debt but if you want to lower the interest rate of your credit card, you need to focus on these two debt solutions.
The first one is balance transfer. This involves a new credit card account that offers an introductory 0% interest rate. Usually, this lasts for a couple of months to more than a year. You want to get the one that has the longest introductory period. For a minimal fee (3% of the transferred amount), you can transfer all your credit card balances into this new credit card. This is a great way to deal with the high-interest rate because all your payments will go to the principal amount that you owe. To make this debt solution really beneficial, you need to aim to pay off your whole balance before the introductory period expires. At the very least, you have to pay a significant part of it. When the 0% interest expires, the card will have a very high interest rate.
Debt consolidation loan
Another option that will allow you to lower the interest rate is through a debt consolidation loan. Most loans have a lower rate compared to credit card debts. This is why you can really benefit if you use this in consolidating credit card debt. Of course, if you want to be smart when borrowing this loan, you need to ensure that you have a high credit score. Not only that, you need to borrow only what you need – nothing more, nothing less.
Consolidating credit card debt is a great way to get out of debt but you need to remember that the journey does not end here. You still have a long way to go when it comes to debt payments. Do not fall into a false sense of debt freedom.