Balance Transfer vs. Consolidation
I have balances on multiple cards that I’m making a little more than the minimum payment on. Which option would enable me to pay off the total amount faster: Putting the balances on one card or debt consolidation?
Terry Says: I’m not quite sure you know what you mean by “debt consolidation.” Most of the companies that offer to do that just get you deeper into trouble. Assuming that you can make at least the minimum monthly payment on all your cards, the best thing to do is just set up a schedule. Keep paying the minimums, but make a special attach on the balance on one card first. You’ll want to pay down the card with the highest interest rate first.
And you can do that if you will just take the current monthly payment and double it. Then pay that same amount every month (even tho the minimum on the card will change.) Don’t charge another penny. Those double-the-current minimum payments will pay off your card in less than three years! Do it, and then close the card.
Sometimes it’s more gratifying to start with the smallest balance first, so you can just put that card away or close it and move on. Also, you might get offers of interest-free balance transfers — but beware that within a year the rate is likely to jump to much higher than you are paying now. But it could give you breathing room on one or two of the cards, so you can pay down the others.
Also, if you’re really overwhelmed, contact the National Foundation for Credit Counseling at 800-388-2227. That will put you in touch with the nearest local office and they can help you more specifically.