Does consolidating credit card debt hurt credit score
You’re also taking on secured debt in exchange for paying off your unsecured credit card debt.If you’re unable to pay the bill, you risk losing your home or vehicle.If you’ve been putting money away in a retirement account, such as an employer-sponsored 401(k) or an IRA, you might be able to use those funds to pay off your debts.Pros: There’s no credit check to take money out of your retirement accounts.Then you can work on solving the cause of the problem.“No matter what option you choose, each has risks and trade-offs,” Huettner says.Also, the combined transferred amounts and fees usually cannot be higher than your credit limit, which might not accommodate all your debts.
Cons: You lower your retirement savings, and you may have to pay income taxes and an early withdrawal penalty if you’re younger than 59 ½.
The other person might also expect you to reciprocate the favor when they need help.
Credit card debt can have a relatively high interest rate compared to other types of debt.
Klein says that putting something at risk that doesn’t have to be put at risk might not make sense.
Credit counseling organizations are often nonprofits that offer people advice and help them create plans for paying off their debts.