if you have a good credit rating, card
issuers will solicit you with attractive
credit card consolidation (transfer balance)
You may also contact your current credit
card issuer about transferring and consolidating
other credit card debt.
Inform them that you are shopping to consolidate
all or part of your credit card debt under
one card if your credit rating
is good, they will want to keep you as
Find the transfer program that offers
a super low interest rate at transfer
terms of 6 or more months. Anything less
than 6 months is not worth the trouble.
Also avoid programs that charge a transfer
fee. The fee will wipe away your low-interest
take the transfer program that offers
the best terms lowest rate, longest
term, and zero transfer fees. Use the
program's transfer checks to payoff those
credit cards listed
that have the highest interest
If your total credit card debt exceeds
the transfer program's credit limit, you
may need to use a second or third balance
your pay down amount:
schedule a payoff amount that significantly reduces your consolidated
amount during the transfer period.
"Debt Payoff" worksheet
to run your numbers on your desktop: download
since most transfer programs offer card
consolidation terms of 6-12 or more months
significantly lesser time than
what you may need to payoff your card
debt you may need to play the transfer
game when one program ends and another
Keep note of other transfer balance offers
that come in the mail hold on to
those offers that carry attractive terms.
Be careful not to jump to another transfer
program within short periods. Every time
you sign up for a transfer program, an
inquiry is made to your credit report.
You want to limit credit inquiries to
"one" inquiry every "six
or more" months.
if your budgeted monthly payment does
not payoff your credit card debt with
12-24 months, you may need to consider
a debt consolidation plan
to lower your other living costs:
as you pay down your credit card, review
our section on lowering your monthly bills
in housing, transporation, living, recreation,
and more. Your monthly cost savings can
be used to pay down your credit card debt
tuck the credit card that has your transfer
balance away. Do not use the credit card
for any credit card purchases. You want
to avoid interest being charged on everyday
purchases. Use a different credit card
for purchases so that you can take avantage
of the 25-day grace period.
Once you payoff these two loans, group
the next low-balance loan and pay it
off quickly over 12-24 months.
This payoff grouping builds a momentum
where you erase 1-2 loans quickly from
your monthly payment plan. The savings
can then be applied to other monthly
loan payments to reduce your aggregate
loan balances quickly.
Take the first two loans on your list
(Loan1 and Loan2) and group them together.
Period to payoff final loan: 5
Set a budgeted payoff plan within 9
— your payoff balance: $2000
— current debt payment: $72 ($32+$40)
— additional payment to
payoff within 9 months: $162
— total monthly payoff amount:
The extra $162 per month will need to
come from budget planning by reducing
other monthly expenses: see lower bills module
note that you will still continue to
pay on your other outstanding loan debt
and group again:
once you have successfully
paid off the two loans in 9 months,
your current loan portfolio will look
like this (assuming no additional debt
and payment reduction on your other
Now take the next loan and apply the
same payoff proceeds to this loan:
— your payoff balance: $2372
— monthly payoff amount: $301 ($234 above + $67 current)
— time needed to payoff: 8.3 months
Now after 9 months, you current loan
portfolio looks like this (assuming
no additional debt and payment reduction
on your other loans):
continue your group payoff by taking
the next loan and applying the same
— your payoff balance: $6004
— monthly payoff amount: $476 ($301 above +$175 current).
— time needed to payoff: 13.2
After 13 months, your current loan balance
will look like this:
apply the same payoff proceeds to payoff
your last loan:
— your payoff balance: $6079
— monthly payoff amount: $929 ($476 above +$453 current).
— time needed to payoff: 6.9 months
by grouping your low-balance
loans together and budgeting an additional
$162 for debt payoff, you were able
to eliminate this debt within 3 years.
That is two years less than allowing
these loans to run their term.
The magic of grouping is that it eliminates
low balance loans quickly so that you
have the motivation and additional funds
to pay down your next loans.
Grouping works best when you develop
a spending plan that meets your budgeted
allowance for living and debt payoff.