How can you consolidate your debts free of cost?
How can you consolidate your debts free of cost?
The current economy has created such a situation where everyone is looking for some kind of debt help. Debt help can be obtained from many debt counseling companies which help the customers to consolidate their debts. But they generally charge a share of the customer’s debt saved. So, if you’re looking for a free debt consolidation help, it’ll be better if you consolidate the debts on your own.
But before you start consolidating your debt, consider the following points and check whether you’re ready for the consolidation program.
* Check your credit score: If you’ve a low credit score, you may not even qualify for the interest rates that’ll help you to ease out of a difficult financial situation.
* Try negotiating: Try to negotiate with your credit card companies or your mortgage lender to get lower interest rates.
* Have a proper planning: Be honest to yourself and realistically make a plan on how you’re going to pay back the additional amount you’re going to borrow.
Now, let’s check out the 3 important ways by which you can consolidate your debts on your own absolutely free of cost.
1. Transfer balance in your credit cards:
The best way to consolidate your credit card debts is to transfer all your credit card debts into a single low-interest card or a card which doesn’t charge on balance transfers. This will stop your debts from multiplying and you can pay-off as much of your debt as possible at ease. Find a credit card that charges 0 % as an introductory offer and transfer all your credit card debts to it. The process generally lasts for 6 months to 1 year within which much of your debt will be paid. After the period, try to get another card with 0 % introductory rate and continue the process.
2. Borrow from 401(k) plan:
If you’ve unsecured debts other than credit card debts, you can borrow money from your 401(k) plan to consolidate and repay all your bills with a lump sum payment. Most of these plans have a feature which allows you to borrow almost 50% of the account’s value. Moreover, the interest rates of 401(k) plan are cheaper than the credit card rates.
3. Borrow from insurance policies:
This is another important way to consolidate your debts on your own. Your life insurance policy allows you to borrow loans against the cash value of the policy. A few benefits of borrowing from your insurance policy are –
* Low interest rates
* No fixed payment schedule
* You do not have to have good credit for the loan to be approved.
Check out which one of these ways suits you the best and go for it. You’ll see that within a very short time you’ll get rid of all your accumulated debts.