At Telco Credit Union, it is easy to become a member/owner. You can complete a single membership application and make one deposit of $5.00 into a savings account. All you have to do is keep a $5.00 minimum in your savings account. Our motto is “once a member always a member” – it’s as simple as that. Membership at Telco is available to active or retired Selected Employee Group (SEG) employees and their immediate family: this includes a member’s wife, husband, daughter, son, mother, father, brother, sister, grandmother, grandfather, and/or grandchildren. Contact us at Telco for help with your financial needs!

After this financially stressful year especially, you may be wondering how to consolidate your debt. Credit card debt consolidation is a strategy that takes multiple credit card balances and combines them into one monthly payment.

Consolidating your debt is ideal if the new debt has a lower annual percentage rate than your credit cards. This can reduce interest costs, make your payments more manageable or shorten the payoff period.

The best way to consolidate will depend on how much debt you have, your credit score and other factors.

Here are the five most effective ways to pay off credit card debt:

  1. Refinance with a balance transfer credit card.
  2. Consolidate with a personal loan.
  3. Tap home equity.
  4. Consider 401(k) savings.
  5. Start a debt management plan.

1. Balance transfer card

Pros:

  • 0% introductory APR period.

Cons:

  • Requires good to excellent credit to qualify.
  • Usually carries a balance transfer fee.
  • Higher APR kicks in after the introductory period.

Also called credit card refinancing, this option transfers credit card debt to a balance transfer credit card that charges no interest for a promotional period, often 12 to 18 months. You’ll need good to excellent credit (690 or higher on the FICO scale) to qualify for most balance transfer cards.

A good balance transfer card will not charge an annual fee, but many issuers charge a one-time balance transfer fee of 3% to 5% of the amount transferred. Before you choose a card, calculate whether the interest you save over time will wipe out the cost of the fee.

Aim to pay your balance down completely before the 0% intro APR period is over. Any remaining balance after that time will have a regular credit card interest rate.

2. Credit card consolidation loan

Pros:

  • Fixed interest rate means your monthly payment won’t change.
  • Low APRs for good to excellent credit.
  • Direct payment to creditors offered by some lenders.

Cons:

  • Hard to get a low rate with bad credit.
  • Some loans carry an origination fee.
  • Credit unions require membership to apply.

3. Home equity loan or line of credit

Pros:

  • Lower interest rates than personal loans.
  • May not require good credit to qualify.
  • Long repayment period keeps payments lower.

Cons:

  • You need equity in your home to qualify, and a home appraisal is usually required.
  • Secured with your home, which you can lose if you default.

4. 401(k) loan

Pros:

  • Lower interest rates than unsecured loans.
  • No impact on your credit score.

Cons:

  • It can reduce your retirement fund.
  • Heavy penalty and fees if you can’t repay.
  • If you lose or leave your job, you may have to quickly pay back your loan.

5. Debt management plan

Pros: 

  • Fixed monthly payments.
  • May cut your interest rate by half.
  • Doesn’t hurt your credit score.

Cons:

  • Startup fees and monthly fees are common.
  • It may take three to five years to repay your debt.
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