DON’T Continue To Make The Minimum Payment. Unless You Want To Be In Debt Forever

Consolidating Debt: DO’s & DON’T’s

Did you rack up some serious debt in 2015? Maybe you went a little crazy with store credit cards, or perhaps you took on a car loan you thought you could afford. Regardless of the circumstances, you found yourself in a financial pickle, struggling to make more than the minimum payment on all of those loans and credit card statements.

Ask yourself this: Would one payment be easier to manage?

Would a lower APR help?

Hint: The answer to both of those questions is YES. Debt consolidation is an easy way out, if you do it right. But this is easier said than done…

  • You apply for a loan to pay off all of your debt. Perhaps you have a student loan and a few retail credit cards close to their credit limit. Add those all up, you owe, ohhh about $10,000.
  • So you go and get approved for this $10,000 loan. They deposit the money right into your checking account!
  • So you start paying stuff down. Goodbye student loan! Goodbye Macy’s balance! Hello freedom.
  • You get your loan statement, and — what?! You only owe a minimum payment of $40??? That’s convenient. Now you’ve got all this extra spending money, not to mention, your lines of credit are paid off now.
  • So you go and treat yourself to a shopping spree… With your Macy’s credit card. There’s your mistake.

A debt consolidation loan is only beneficial if you pay off your other debts, and then stop using them. Otherwise you end up racking up even more debt, only this time, you’re in double trouble.

Here are a few DO’s and DON’T’s when consolidating debt:

  • DO look at interest rates. If you have an introductory rate on one of your cards, LEAVE IT ALONE. It makes no sense to move a 0% APR loan over if you can pay it off within the promotional period.
  • DON’T continue to use your cards after you’ve paid them down. At least wait until you’ve paid down the debt consolidation loan a little.
  • DO avoid payday loans and cash advances from credit card companies. If it sounds too good to be true it probably is. These types of advances usually come with a million strings attached.
  • DON’T continue to make the minimum payment. Unless you want to be in debt forever.
  • DO look into credit unions, rather than banks. Credit Unions are more likely to offer you lower rates than big banks.

If you’re weary or don’t know where to start, my credit union (Fort Worth Community Credit Union) offers an Access Line of Credit, up to $15,000 at rates as low as 9.9% APR. That’s almost unheard of! Visit for more info or just visit one of their branches!