Owing money to many creditors can be overwhelming. Remembering multiple due dates and making multiple minimum payments, all while watching those outstanding credit card balances barely move can make your financial life feel out of control. Debt consolidation can be a smart way to finally dominate your debt.

Balance Transfer Consolidation
People often try to consolidate debt using a credit card balance transfer offer. These offers allow you to consolidate high-rate credit card balances onto one credit card with a low or 0% rate for a short period of time, usually 6 to 12 months. The challenge is that you’ll usually pay a 2-3% fee of each outstanding balance for the transfer, which increases your overall debt. Plus, if you’re unable to pay off that balance within the allotted period of time, your debt returns to a high rate and your monthly payment increases. Balance transfers may sound attractive but rarely help you take control of your debt.

Fixed-Rate Debt Consolidation Loan
Conversely, a debt consolidation loan is a fixed-rate, fixed-term loan. That means your interest rate and monthly payment will remain the same for the life of the loan, giving you a guaranteed monthly payment and payoff date. Furthermore, unlike a credit card, a fixed-term loan does not offer you a credit line that you can keep tapping into, which helps you avoid the temptation to spend more and helps you pay down your debt faster.

Secured vs. Unsecured Debt Consolidation Loans
There are two types of debt consolidation loans: secured and unsecured. A secured loan means you’re offering a form of collateral, such as the equity in your home or vehicle, that you’ll forfeit if you do not repay the loan. Equity is the value of your collateral after you subtract anything you owe on it. An unsecured loan means you’re using your credit and payment history to demonstrate your ability to repay the loan versus offering collateral. Secured loans have lower interest rates because they carry less risk for your lender.

Take Control of Your Debt
To truly take control of your debt, we highly recommend a debt consolidation loan. At Clearwater Credit Union, we see an average of $15,000 in credit card debt with a debt consolidation loan. According to, the average credit card interest rate nationally is 22.46% APR. If you were to make only the required 2% minimum monthly payment of $300, it would take 12.5 years to pay off. Using a secured loan with the average market rate of 11.00% APR, you would pay off that same $15,000 balance in just over 5.5 years. Now that’s dominating your debt!

At Clearwater Credit Union, we’re passionate about educating the communities we serve about how to live financially strong. Throughout the year, we partner with Homeword on their Financial Skill Building classes, which are a wealth of information regarding credit building, budgeting, collections, credit repair and so much more. Enroll today to help you build a stronger financial future.