Can't Get a Debt Consolidation Loan? Here Are Five Steps You Can Take Anyway

Debt consolidation loans can be hard to come by these days. Even so, debt consolidation remains an important technique for helping to reduce borrowing costs and organize debts. If you can't get a debt consolidation loan right now, there are still five debt consolidation techniques you can use for the time being.

Five Credit Card Debt Consolidation Techniques

Here are five things you can do without a debt consolidation loan, using only your credit cards:

1. Use your lower-interest credit cards for debt consolidation. List your credit card balances, interest rates, and credit limits. Act to move balances to the cards with the lowest interest rates to the extent their credit limits will allow. Be sure to monitor this monthly, since both interest rates and credit limits are subject to change.
2. Prioritize payments by credit card terms. If the credit limits on your low-interest cards don't allow you to consolidate all your credit card debt there, at least target the cards with the highest rates for the largest monthly payments. Be sure to keep up with the minimum payments on all your cards, so you don't damage your credit rating and blow the lower interest rates on your other cards.
3. Make selective use of new offers. The key word here is "selective." Some people take advantage of special introductory rates to roll over existing balances. However, those special rates may be gimmicks, and opening too many new cards will further hurt your credit rating. Do this only occasionally, when low rates are guaranteed for a reasonably long time.
4. Create a credit card budget system. To keep your overall balances moving downward, give yourself a monthly limit of how much credit you can use, and when you exceed that limit, take all the cards out of your wallet.
5. Keep only the right cards in your wallet. Even when you are under your limit, keep only the low-interest cards in your wallet. Don't be too quick to cancel the old ones--your ratio of debt to available credit is a factor in your credit score--but keep them where they can do you no further harm.

These steps won't solve your problems all in one move, but if you follow this plan diligently, over time you will find your debt gravitating more and more toward your less expensive credit cards, and away from the more expensive ones. The resulting savings will help you reduce the overall level of debt.

Building Toward a Debt Consolidation Loan

Getting control of your debts is like learning to walk. The important thing is to start, even if it's just baby steps at first. You can then progress to bigger steps that will get you there more quickly. Managing your credit cards can be the first step toward debt consolidation. As you begin to reduce debt and improve your payment history, you should start to see your credit rating move upward. Also with time you should build the equity in your home back up. With these changes, you'll be more likely to get a debt consolidation loan. At that point, with a better interest rate on more of your debt, you'll be ready to make even faster progress.



About the Author:
Richard Barrington has been a businessman and writer for a quarter century. Shortly after graduating Magna Cum Laude from St. John Fisher College in 1983, Richard joined Manning & Napier Advisors, Inc., a Registered Investment Advisor. Starting in an entry-level operations position, he worked his way up to become head of marketing and client service, an owner of the firm, and a member of its governing Executive Committee. His efforts contributed to the firms growth from slightly over $1 billion in assets under management when he joined, to over $12 billion in 2006. While at Manning & Napier, Richard earned the Chartered Financial Analyst (CFA) designation from the Association of Investment Management and Research (now the CFA Institute").

In August, 2006, Richard retired from the investment business to pursue a writing career. He has worked primarily as a freelance writer on a variety of business topics, while also writing manuscripts for three books.