In today's video I'm going over how to consolidate credit card debt with three
proven ways because if you guys do have credit card debt I want you to get out
because even if you've got just a little bit of credit card debt that still sucks
because you're gonna be paying interest on it but the real big problem is when
you have a ton of credit card debt and that's because you'll be spending a ton
of money on interest and on top of that you're gonna be jacking up your credit
utilization score as well so in this video I'm gonna teach you how to
consolidate credit card debt but I'm also gonna teach you why you should do
it in the first place and if you just found this channel I'm Jason with honest
finance and I make a lot of videos on different topics that'll give your life
and your finances more value so feel free to subscribe if you guys want to or
just give this video a like but now let's start talking about debt
consolidation now before I start talking about how to consolidate credit card
debt I first need to go over why you should do it in the first place because
there's mainly two reasons why you need to get out of credit card debt and the
first reason is called your credit utilization score this controls 30
percent of your credit score which is 255 points and it all has to do with how
much you're spending on your credit cards versus how much their limits are
so basically if you've got three credit cards with a total spending limit of
$20,000 but you spend $8,000 during the month then your credit utilization score
is gonna be 40% which is not good now I'll explain why it's a bad thing in
just a second but in order to do the math all you do is take 8,000 divide it
by 20 thousand and then that gives you your utilization score you want your
utilization score to be below 15% because that's going to give you the
biggest boost to your credit score and if you can get the score between 1 and 5
percent then that's going to be the absolute best utilization score that you
can have towards your credit score and obviously if you have a ton of credit
card debt then your credit score is always going to suffer because of the
bad utilization score and if you do want to know more about how your credit
utilization score works then you can watch this video up here where I'll
teach you quite a bit more about it so if you want to improve your credit score
then you're gonna have to get rid of your credit card debt and maybe one of
the only ways you can do that is through consolidation now the second reason why
you should consolidate your credit card debt is simply because of how much the
interest is actually costing you I mean let's say that you owe $10,000 on all
your credit cards and the average interest rate is 22 percent well with
those numbers you're going to be wasting about a hundred and eighty dollars in
interest per month just based on a $10,000
balance but if you consolidated all of that debt into just one loan that was 8%
then you're only gonna be paying about $65 a month in interest which is so much
better now those are the reasons why you should definitely get out of credit card
debt but now I want to talk about how to get out of credit card debt so let's get
started on that and if you've made it this far into the video could you please
just comment down below and say I'm still here that way I still know who's
watching the video Thanks the first way to do it is just by
taking out a debt consolidation loan and then paying off your credit cards and
then you'll just have one monthly fixed payment now highly advise that you only
do this if you get a good rate and terms and then you make sure that you pay off
your credit cards and you never go back into the credit card debt again because
if you just keep your same spending habits then you're gonna rack up another
credit card balance and you'll be paying off the loan at the same time so just
take my advice and stop all of your bad spending habits and get out of debt for
good now as far as lenders go you can check with your local credit unions or
you can check online for some of the best rates and just stick with reputable
lenders because there are a lot of really bad personal loans out there and
I don't want you guys to get into any of those I especially don't want you guys
paying any origination fees because those can actually be up to 5% of the
total of the loans value that you have to pay up front right when you get the
loan so let's just say that you take out a personal loan for $10,000 with a 5%
origination fee well you're gonna have to pay an instant 500 bucks and then
when you actually take out the loan it's only gonna be for ninety five hundred
bucks all because of the stupid origination fee a lot of the big lenders
even charge origination fees like prosper and Lending Club so I would
definitely recommend going with someone that doesn't charge an origination fee
because it's just a waste of money that you don't have to pay I'd recommend
checking out light stream loans for debt consolidation because they've got some
of the best rates in the industry and they don't charge any fees they don't
have any dirty origination fees and they don't have prepayment penalties as well
they'll also beat any competitors rate for the same loan by a tenth of a point
so you'll always know that light stream is gonna have the best rates from anyone
now I'll leave an affiliate link in the description which means I may be
compensated if you click through it but just keep in mind that I want you guys
to check out light stream loans because I'm only gonna recommend companies that
I think are the best value for you now the next way you can consolidate credit
card is by actually finding a new credit card
with a zero percent balance transfer offering because that way you can move
all of your debt into the new card and pay zero percent interest they'll
usually give you about twelve months with zero percent interest so it's a
really good way to just quickly tackle your credit card debt but there are some
cons to it as well for instance you'll most likely have to pay an upfront 3%
balance transfer fee which is just a total waste of money and then on top of
that your credit utilization score is still gonna suck because you're just
moving the debt on to another card so honestly it's not always the best option
to move your debt from one credit card onto another credit card but it is a
solution if they offer the 0% transfer and that's because if you've got a
little bit of credit card debt at 0% interest for 12 months then you probably
have enough time to tackle the debt and then not worry about it ever again now
last time I lists of debt consolidation is called cash out refinancing what this
means is that you can either refinance your car or your house and you can
actually take some of the equity that you've built up in them and then you can
use that as a cash out refinance so that you can pay off your credit cards so if
you refinanced your car for $20,000 but it was actually worth $30,000 then you
could actually take some cash out on the loan and make it a little bit bigger
like 25,000 and then you can use that extra money to pay off your credit cards
this is a great way to get rid of credit card debt because the interest rates
probably gonna be a lot cheaper than it is on a personal loan but I would still
warn that you're taking money out against your equity which is not a good
thing because if you take out money from your built up equity then you're just
gonna owe more in that particular item just to pay off your credit cards and on
top of that you've still got to go through the hassle of refinancing and
trust me if it's a home just the closing costs alone are not going to be worth
doing that option so I would only look into this option if you were gonna
refinance anyway and then you can pay off your credit cards at the same time
now these are the ways that I'd recommend you guys can use to get out of
credit card debt there are definitely more ways that you guys can do it but
these are the three ways that I would recommend trying first because they work
credit card debt totally sucks but you can get out of the hole if you
consolidate responsibly just pay off the debt and make sure that you don't get
into the same situation a second time once again I'm Jason with honest finance
and I make a lot of videos on different topics that will give your life and your
finances more value so feel free to subscribe if you want to or you can
check out some more of my videos here that's all