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by Ashley Maready | Published on March 12, 2023
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This could be an easier option.
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Are you facing down a pile of debt, wondering how best to pay it off? You have a lot of options when it comes to getting rid of debt. You might consider paying off your debts one by one, either by prioritizing the lowest amounts first (the debt snowball method). Or you could look at targeting your highest-interest debts first — this is the debt avalanche method, and you’ll save more on interest with this approach than you will with the debt snowball.
But if you’re having trouble managing multiple debts (multiple due dates, multiple payment amounts), you might look at consolidating your debt instead. This is when you borrow a sum of money to pay off all your debts at once, then you pay off the amount borrowed on a set timeline. There are multiple ways to approach this, too.
A personal loan is a common way to consolidate debt, and if you go this route, you could end up with a much lower interest rate on that loan if you have good credit. But there’s a way to consolidate your debt that comes with no interest at all — if you can finish paying it off before interest is assessed. If this sounds appealing to you, consider consolidating your debt with a 0% APR credit card.
Discover: These personal loans are best for debt consolidation
More: Prequalify for a personal loan without impacting your credit score
Discover: These personal loans are best for debt consolidation
More: Prequalify for a personal loan without impacting your credit score
Some credit cards come with an introductory period of 0% interest. Sometimes these are designated specifically as balance transfer cards, to reflect their use in debt consolidation. These can help you save money in the course of paying off your debt, because once you move all your existing balances to the card, you won’t be charged more interest on them for a designated period of time. This could be as long as 21 months for some cards.
You may have to pay a balance transfer fee, however, and this is usually a percentage of the balances you’re moving to the card. You can use a balance transfer calculator to see if the card you’re considering will help you save money on your debt payoff.
Not every debt payoff method will work for every person, so it’s a good idea to consider whether a 0% APR credit card is a good way to consolidate your debts. Consider the following questions:
If you’re ready to consolidate your debts to make paying them off easier, don’t assume that a personal loan is your only option. Consider 0% APR credit cards too, and make paying off debt easier while getting a break from earning interest on your balances.
Ashley Maready is a former history museum professional who entered digital content writing and editing in 2021. She has a BA from Hood College and an MA from Shippensburg University.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
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