Learn 4 Keys to Successful Debt Consolidation

To stay committed, Rouse suggests writing down why you want to be debt-free and how frequently you will make payments, as well as setting periodic reminders to assess your progress.

 

Locking away credit cards does not imply canceling accounts, which may harm your credit. According to Shawn Tydlaska, a certified financial planner with California firm Ballast Point Financial Planning, the one exception to the no-use rule is a minor charge on your card every few months — paid on time and in full — to keep the account alive and your credit intact.

Consolidation Products Comparison

Balance transfer cards allow you to transfer debt from other cards and charge no interest for a set period — the better ones provide between 15 and 21 months — after which a high-interest rate kicks in. Unfortunately, most credit cards charge debt transfer fees and demand excellent credit and a high salary to qualify.

To increase your chances of acquiring one, Tydlaska recommends adding up all potential sources of income — including money in your savings account and 401(k) — and listing that total on your application, rather than simply your salary.

Debt consolidation loans have lower interest rates than credit cards and allow you to borrow more money. Rates are determined by your credit history and the amount of debt you have. In addition, a lender that delivers money directly to your creditors can remove the incentive to spend that money rather than use it to pay off debt. This option is available from only a few lenders, including Wells Fargo, Discover, and FreedomPlus.

 

Obtain Support for Your Goal

Debt may feel like a taboo subject, but according to Isaac and Rouse, peer support is a powerful motivator and can hold people accountable.

Debt support organizations, online forums, or a close family member can help you stay on track. Online lenders, like Payoff and Prosper, also provide personalized advice or apps to incentivize borrowers.