WASHINGTON (DC News Now) — Starting to pay off credit card debt can be challenging for many people, but consumer advocates and financial experts have offered several ways to tackle this.
One avenue is consolidating your balances.
Credit card balances remain high at $917 billion nationwide, according to a recent quarterly report for the start of 2023 from TransUnion.s
CNET shared ‘5 strategies’ to consolidate consumers’ credit card debt.
Though recommendations include using a balance transfer card, there are pros and cons to consider.
While CNET says benefits involve potentially attractive 0% introductory percentage rates for at least a year, there may be a balance transfer fee between 3% to 5%. Plus, failing to pay off debt before interest rates kick in could build more debt after taking out a balance transfer card.
CNET also cites debt consolidation loans, allowing for fixed repayment schedules and longer time to pay off debt.
However, they say some loans charge a fee and interest rates are based on your credit score.
CNET also points to a home equity loan, a line of credit or refinancing and a 401k loan.
Credit counseling and loan officers can provide advice for paying off debt without hurting credit scores, said CNET and Jason Howell, a financial analyst and adjunct professor at American University’s Department of Finance and Real Estate.
“They will often tell you, ‘keep your balance below about 20% of your credit line, and that will give you the best opportunity to advance the most credit,'” Howell said.
The chief credit analyst at Lending Tree said most people who ask their banks for lower interest rates usually get them.