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