Consolidating credit card debt with a loan

» MORE: The good and bad of home equity loans Pros: Back to top If you have an employer-sponsored retirement account, it’s not advisable to take a loan from it, since doing so can significantly impact your retirement.However, if you’ve ruled out balance transfer cards and other types of loans, this may be an option for you.Most issuers charge a balance transfer fee of around 3%, and some also charge an annual fee.Before you choose a card, calculate whether the interest you save over time will wipe out the cost of the fee.You’ll need a good to excellent credit score — above 690 — to qualify for most cards.Make a budget to pay off your debt by the end of the introductory period, because any remaining balance after that time will be subject to a regular credit card interest rate.Most will give you an estimated rate without a “hard inquiry” on your credit, unlike many banks and credit unions.For online lenders, the lowest rates go to those with the best credit; rates top out at 36%.

The lender will pay off your credit card bills, and in exchange you’ll enter into a loan agreement with the lender to pay back the money.That means you’ll need to pay more than the minimum payment due to reduce the principal and make a dent in your overall debt.Since both types of loans are secured by your house, you could lose it if you don’t keep up with payments.You can use that money to pay off your credit cards or other debts.A HELOC typically requires interest-only payments during what’s known as the draw period, which can range from five to 20 years but is typically 10 years.

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