Consolidation Can Be Done Without Large Fees: 3 Ways to Consolidate Your Debts On Your Own


Dealing with financial matters, such as credit card debt, can feel messy and ineffective when you’re pulling from different accounts to pay down a bunch of different bills at once. This is particularly true if you’re struggling with a high amount of interest among some or all of them.

If you resort to using the services of a debt consolidation company, those high interest rates may be a sticking point. Fortunately, there are a few ways you can sort this out yourself – here are three.

  1. Borrow Against Your Home.

If you have equity in your home, you can open up a line of credit and pay down your credit card debt in one fell swoop. The home equity line of credit is like a credit card in that you get a set amount of money you can take out to pay for anything you want. The interest rates and payment amounts will change over time, and after a certain amount of time, the whole line must be paid off. At that time, you may be eligible for a renewal.

Home equity loans involve larger sums of money with lower interest rates. Your monthly payment also won’t change, making it a solid option for many.

Of course, you are borrowing against your home, so this is only an avenue you should take if you’re sure you’re never going to miss a payment. If you slip up, your home could go into foreclosure.

  1. Transfer Balances.

A lot of people are looking for loan details now, but in addition to personal loans, check out which cards you have on hand that could potentially streamline the process of paying down debt.

If one of your cards (or a new card you qualify for) has an especially large limit, and an interest rate you can live with, use that to pay off some of your other cards. Of course, you’ll have to search for any hidden fees that may come with balance transfers, so speak the company whose card you’d like to use to do this. And there you have it – one monthly payment for your debt.

  1. Borrow Against Life Insurance or Retirement.

Using your life insurance or retirement funds to pay off debt should only occur if you find yourself backed into a corner by your debt. Taking a loan out on your life insurance policy means that you’re taking back the money you’ve put in. But your equity, like most equity, is subject to change depending on how the market performs. You could lose your policy, or your loved ones could get nothing in the way of financial relief when you pass, because the money is going to cover the loan you took out.

Using your 401k to consolidate can also be sticky. If you lose your job, it’ll have to be paid back right away. And if you don’t? You still have just five years to pay it off, or you’ll be paying even more in penalties.

In the end, you want to choose the option that presents less of a risk to you – not the most cash. Don’t gamble with things you’re not willing to give up (like your home or retirement), keep making payments, and always keep an eye on your preferred solution’s interest rates.