Smart Alternatives to Credit Card Consolidation

Whether credit card consolidation — the act of turning multiple separate debts into a single monthly payment at a reduced interest rate — is a viable option for you depends a lot on your credit rating. Generally speaking, borrowers with good to excellent credit have the best chance of qualifying for the most competitive consolidation products with the lowest interest rates. 

In other words, if your debt load has already affected your ability to stay on top of payments or to keep your credit utilization rates low, consolidation may not be your most feasible option. 

Thankfully, there is a wide range of debt relief options available for all kinds of situations. Start by looking into these alternatives to credit card consolidation in America.

Try a Credit Counseling Program

Eliminating debt can be a lot easier when you have someone on your side, which is where credit counselors can help. These qualified experts are available to help you evaluate your budget, discuss your financial goals, and come up with debt solutions. This strategy can be a way to get advice and information, or it can be the first step toward a debt management plan (DMP).

So, who needs credit counseling? CNBC outlines a few situations in which it may be advantageous to take advantage of this service:

- You feel stressed out about figuring out how to stay on top of your debts.
- You’re starting to have trouble making monthly payments.
- You’re experiencing a life milestone like starting a business or buying a home.
- You’re dealing with an unexpected change to your financial situation, like a layoff.

Make Your Own Repayment Schedule

Trying to pay down debts without a sound plan can quickly lead to disorganization, missed opportunities and additional stress, especially if you have multiple credit cards plus all your other monthly obligations to juggle.

Taking the time to make a long-term plan that guides your short-term behavior can help you pay off your debts faster, reduce the hassle you face in doing so, and minimize the amount you pay in interest over the life of your obligations.

Perhaps the most cost-effective plan to adopt is debt avalanching. Under this plan, you’ll keep making minimum payments across all your accounts, while funneling as much money as possible toward your highest-interest debt. You'll continue this approach until all your debt is gone.

Negotiate with Creditors to Settle Debts

Borrowers struggling to keep up with payments, and who already have damaged credit because of it, may be in position to negotiate with creditors. Borrowers who take this tack are essentially saying, “I’ll give you XX percentage of what I owe by this date if you accept it in lieu of full payment.”

Some consumers negotiate on their own; others prefer to work through a settlement program, which uses trained negotiators to handle creditor communications. For the latter, you're required to make monthly deposits to assure that creditor payments are made on time.

For their fee, these programs take a percentage of the settled debt off the back end. Steer clear of agencies who want their fee up front.

If credit card consolidation is not an option for you, these alternatives are definitely worth exploring.

If credit card consolidation is not an option for you for whatever reason, these alternatives are definitely worth exploring more in depth until you find one that works for your situation.