Creating a plan to eliminate debt may involve consolidating multiple credit card balances into one personal loan. Only one payment each month simplifies the process, eliminating the chance of forgetting to pay an account. Interest rates may be lowered by transferring balances from credit cards to a personal loan as well, especially if you've recently experienced an increase. Many lenders offer personal loans for consolidating credit card debt.
Call around to local banks and credit unions to obtain their rates. Verify their specific criteria for personal loan approval. Choose a lender with low interest rates, no additional fees and no prepayment penalties.
Gather all of your most recent credit card statements, and any other account information that you would like to consolidate into a personal loan. Take proof of income, such as one to two month's pay stubs or your tax return if self employed. Don't forget your identification; the lender will probably make copies of your driver's license and Social Security card for their records.
Apply for your personal loan. Depending on the lender, you may be approved during the visit; others take up to 24 hours. If approved, the lender will make the payments directly to the credit card companies; you will not receive the check yourself.
Follow up with credit card companies after one to two weeks to verify the balances have been paid in full. Avoid closing these accounts unless you will be overly tempted to use the credit card again. Closing accounts can lower your credit score by decreasing your available credit and decreasing your credit age. However, if you feel you will likely charge high balances again, they are best closed.
Pay your personal loan on time each month. If possible, make more than the minimum payment. Apply extra money toward the balance, such as tax refunds and gifts. Paying your loan off earlier will reduce the amount you pay in interest.
Consider signing up for a money management course, such as Dave Ramsey’s Financial Peace University. Learning how to budget and spend wisely will establish good habits to prevent debt from recurring.
Monitor your credit reports yearly.
Things You'll Need
Most recent credit card statements
Social Security card