Your high-interest credit card debt should be consolidated so you can make one,   smaller monthly payment instead of several. Additionally, consolidation could help you make payments on several of them at once.

You pay off in one instance several high interest loans, or sometimes even lower

interest rates through debt consolidation. Now let's look at some of the most effective credit card debt consolidation methods in detail.

Pay Multiple Debts from One Source: You will now pay several debts from one  source

Pay less Interest: This is compared to credit cards whereby you will pay much lower rates

Pay Debt Quicker: Higher interests and scheduled repayments quickly clear your debt.

Broad Techniques: Applied in Credit Card Debt Consolidation

1. Transfer Credit Cards

Balance transfer credit cards is one of the new credit card-based debt consolidation    options Of course, most of these balance transfer cards give 0% introductory APR for

a balance transfer and pay no interest when you transfer existing credit card

balances for that period that might be from as little as 12 months to as many as 18 months.

How it works:

•    Request a credit card with a balance transfer offer of 0% APR.

•    Pay interest-free the outstanding amount before the end of the introductory period.

Pros

•    Advances 0% Introductory APR

•    Save much interest if paid within time

Cons

•    The remaining period other than the promotional one, the interest rate is relatively quite high

•    Fees for balance transfers range from 3 to 5% of the transferred amount.

2. Personal Loans:

You would pay off the credit card balances using the personal loan so that you had to make only one monthly installment to the loan provider. Personal loans are bound to  have less interest rate than credit cards.

How it Works:

•    Pay back your credit card dues with the amount available in the loan

•    Charge to be taken off

•    You repay the loan in constant monthly installments

Pros

•    You pay fewer interest rates compared to what you would incur if you were using your credit card

•    You have easier budgeting as you pay a fixed amount every month

Cons

•    You use the loan money to pay down the credit card bills.

•    Origination fee has to be paid.

•     Interest rates are set based on credit score.

3. Home Equity Loan or HELOC

If you do have property, you can also consolidate credit card balances by actually  using what is called a home equity loan or home equity line of credit, HELOC. It's   basically just another way of borrowing against the equity attached to the house at much lower interest rates compared with the ones on your credit cards.

How it Works:

•     Use the credit card balance's revenues to pay off the required amount.

•    Monthly payment of installments for the repayment of the loan or credit line.

Pros

•     Interest is low

•    Mortgage amounts that you can raise are relatively higher as it is dependent upon the amount of equity you have in your house

Cons

•    Your house becomes a collateral to secure the loan; the bank takes your

house in case you are unable to make payments, and notice for foreclosure is provided

•    The closing costs and commissions

4. Debt Management Plan (DMP)

DMP is an abbreviation for debt management plans hence a monitored repayment   plan managed by a credit counseling agency. They help you pool your money every month towards various debts that you have accrued from your credit cards. You pay just one monthly payment to the agency, and they collect the distribution of funds to all your creditors.

How it works

•    A credit counseling organization creates a DMP on your behalf.

•    The agency then divides the amount collected amongst your creditors.

Pros

•    Wiping off of interest charges along with respite from charges.

•    Expenses streamlined into one single amount that is manageable.

Cons

•    DMP results after three to five years.

•    Cancellation of credit cards affects score for a minor period

5. Consolidation Loan

Consolidation loans are actually constructed with the intention to accumulate various debts into a single account.

Consolidation loans are usually issued by banks, credit unions, and online lenders and do not bear interest rates higher than those for credit cards.

How it works:

•    Apply for a consolidation loan.

•    Pay loan out with fixed monthly payments over time.

Pros

•    Tends to allow multiple debts to be consolidated into a single payment.

•    Promotes the hope that there will be better interest and fixed terms of repayment.

Cons

•    Origination fees

•    Debt Consolidation Strategy Options

Before engaging in any consolidation mode of debt, do discover your financial status as well as long-term goals

Conclusion

Credit card consolidation is really an effective technique in managing and settling  your debts. In using a balance transfer credit card or taking out a personal loan or even the debt management plan.

It would work to ensure fewer payments, a lower interest rate, and pay off much    quicker. With careful consideration of such options, the right strategy will be found according to financial goals as a means of reaching debt freedom.