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Countless Americans struggle with credit card debt on a regular basis. Trying to get out from under that debt can be an overwhelming process.

Many people try to consolidate their outstanding debt under one bill, lower their overall interest rates, and simplify the process of repayment. Yet, this often comes with plenty of perils to consider, so it’s important that you know what you should and shouldn’t do.

With that in mind, here are some dos and don’ts of consolidating your credit card debt:


…set up a balance transfer credit cards. One extremely easy way to refinance your credit card debt is by opening a new balance transfer credit card and moving your balances to it. These 0% interest cards give you time to focus on paying down your credit card balance by deferring your interest. The interest savings typically cover the cost of upfront fees, while the process will supercharge your ability to pay back debts. However, there are limits; for example, you can only consolidate as much debt on your balance transfer card as your new line of credit will allow.

look into debt consolidation laws. Taking out a separate consolidation loan can be a good way to consolidate your credit card debt, but only if you can get a lower interest rate than what’s part of your card’s terms. You should also know what type of payment plan you’ll be entering with this new loan. As long as you’re lowering your interest rates and know about any and all costs involved, then it can be a good alternative to opening a balance transfer credit card.

work on a repayment plan. After you decide how to consolidate your credit card debt, start working on a repayment plan. Decide how much you can afford on a monthly basis and estimate how long it will take before your loan is fully paid off. You want to find a good balance between saving and paying off the debt; you may hate debt, and want to get it out of the way as soon as possible, but you also want to keep saving up money for potential emergencies.


…make new purchases on your balance transfer card. When you’re transferring all of your balances onto a new card, focus first and foremost on repaying your debt. Don’t charge new purchases to this card. If you continue to make new purchases instead of paying your debt, then you can’t put a dent in the principal balance you had planned to get rid of.

take out home equity loans. While you look for ways to consolidate credit card debt, you may come across offers for home equity loans, which have you put up your home as collateral. It goes without saying that these are extremely risky, so don’t take one of these out to pay down your outstanding credit card debt.