Due to increasing costs of living, the desire to purchase consumer goods, and any number of financial setbacks, it can be easy for someone to get into debt. Unfortunately, the high costs of credit card debt can make it next to impossible to pay off the balance. In many cases, the best way to pay off a lot of credit card debt would be to take out a personal loan, which normally comes with lower interest rates and fees and allows your to consolidate your debt. There are several types of personal loans that are ideal for helping people get out of credit card debt.
Mortgage Refinance and Cash Out
One of the most effective ways to consolidate your debt is to take out a new mortgage. If you have owned your home for awhile and have paid back the loan as agreed, there is a good chance that you have accumulated some equity in your home. Even if you have a poor credit score, there are many lenders that would be willing to provide you with cash out mortgage, which will provide you with financing up to 80% of your home value. Any excess funds that you have above 20% equity will be provided to you as cash and could be used to pay off other debts. In many cases, this means that you are able to replaced high-interest credit card debts with low-interest mortgage debt.
Debt Consolidation Loans
Another way to pay off your loans is to get a debt consolidation loan through a consumer-lending agency that has a good reputation. There are many local, state, and national programs that are designed to help people consolidate their debt into one, lower-interest loan payment. In the majority of situations, this will result in a lower interest rate and fixed monthly payment, which will provide you with a scheduled repayment plan. Some of the best places to get a debt consolidation loan is through credit counseling agencies, peer-to-peer lending firms, and even traditional banks.
If you have a lot of credit card debt, another option would be to open a new credit card and roll all of your debt onto the new card. In order to attract new customers, many credit card providers offer free debt rollovers as a reward that goes along with opening a new card. For those that have good credit, credit card rollovers often also come with a period of zero percent interest on all new balance transfers. If you believe that you could pay off the balance during this introductory period, this could be the most affordable debt consolidation option. However, if you expect that it will take longer to pay off the outstanding balance, it is important that you understand what the interest rate will be after the introductory period is over.