This is another way to do a do-it-yourself debt consolidation. If you are in very serious financial trouble and can’t control your spending, this method could get you into even more trouble, but if you are reasonably disciplined, it can be a simple way to lower your interest rates.
Debt Consolidation on a Credit Card
Credit card companies really want you to sign up for their cards. Often they will offer very low interest payment for the first 6 months on balance transfers. In some cases, you can combine debt onto a new credit card and save money that way. For example if you have a loan on your car that is at 7% and a credit card is offering you 3% for the next 6 months, you might be able to transfer the loan for your car to the credit card.
Be aware that once the introductory period is up, the rates may go back up to 20% or more. If the lowered interest lets you pay off your car in the 6 months, then this type of DIY debt consolidation may make sense.
Another option is to hop from credit card to credit card going for the lowest rate. This can be a little tricky and dangerous. If you have a lot of equity in your home and know that you could always pay off the cards by taking out a low interest home equity loan, this isn’t too risky, but if you have no backup plan, this type of consolidation can be very dangerous. If you can’t find another card to offload the credit, you may be stuck with a very high payment rate and no way to get out of it. If that happens, you’ll probably be worse of than before.
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