In regards to credit card debt, is it better to consolidate for a lower interest rate? Or would it be better to take out a small loan?
With respect to paying off credit card debts, the best way to do so is to consolidate the debt at the lowest possible interest rate and make the largest monthly payment that you can afford.
Most often, if you can take out a small loan that is OK too as long as the rate is as low as or lower than what you would be paying if consolidating under one of your credit cards.
The key is to drop the interest rate (if you can) and make as large a payment as you can afford.
If you can’t consolidate, then you should rank your debt by interest rate and pay off the balances at the highest interest rate first. Set the other accounts to the minimum payment and focus on paying off the debt that costs you the most. Then you just keep focusing on paying off the credit card with the highest rate until you get them all paid off.
I hope this helps. I would be happy to answer any follow up questions you may have regarding prepayment or reduction of debt.
| 11.10.15 @ 00:21