Keeping track of your debt can be challenging when you have loans, bank overdrafts, and credit cards that span across several different accounts. If you’re a Michigan resident and looking to reduce your debt without turning to bankruptcy, you may want to consider credit card debt consolidation.
What is debt consolidation?
Similar to bankruptcy, debt consolidation combines your debt into a single monthly payment. This can make it easier to manage all your expenses. There are several methods you can use to consolidate your debt and you may be able to reduce your interest payments with consolidation as well.
Pros and cons of debt consolidation
It’s important to consider the advantages and drawbacks of debt consolidation when you’re considering this option as opposed to bankruptcy.
One advantage of credit card consolidation is that this option makes debt easier to manage since you’re only making one payment each month. This reduces the chances that you’ll forget a payment and you can improve your credit score if you continue to make your payments on time.
You’ll also be able to lower or eliminate your interest rate on your debt if you use a 0% balance transfer or a low-interest rate card to consolidate your debt.
If you think you’d rather consolidate your debt than file for bankruptcy, keep in mind that you may also encounter costly transfer fees. The fees could cancel out the money you saved by consolidating your debt.
Consolidation can also make the debt repayment process longer. This is especially true if you have a large amount of debt and you’re only making minimum payments. It’s best to pay more than the minimum amount if possible to expedite the debt elimination process.