Need Help with Debt Consolidation? Here’s How to Choose the Right Debt Settlement Company

Are you drowning in credit card debt? According to the New York Federal Reserve, approximately 35% of U.S. households carry credit card debt and the average for indebted households is more than $15,000.

If you have consumer debt, reducing or eliminating that debt should be your primary goal.

Debt consolidation: your options

If you’re looking at consolidating your debt, consider the following options:
-A debt consolidation loan
-A balance transfer credit card
-Working with a debt settlement company

Let’s review each one by one:

Debt consolidation: loans

Several different types of loans can be used to consolidate debt. Consider:

Home Equity Lines of Credit (HELOC) – If you’ve owned a home for several years and have some equity, this could be an option. Just be aware that you are also risking foreclosure should you not pay the loan back promptly.

Secured Personal Loan – While this is an option, it isn’t a very viable one. A secured personal loan might be something like a car title loan, where interest rates can reach well above 90% APR.

Unsecured Personal Loan – If you can qualify, an unsecured personal loan might be one of your best options. The loan isn’t tied to any of your personal property, and you can shop around for the best terms.

Bad Credit Business Loan – If you own a small business or if your debt is business-related, you might qualify for a business loan. One choice is a company like Funding Circle, that lends directly to small businesses (min. $25,000).

Top personal loan providers for debt consolidation

Want to use a personal loan for debt consolidation? Your success will largely depend on your current credit score. The first step is pulling your credit score, so you know where you stand. Then shop around for a provider, and compare their annual percentage rates (APRs). Following are several top online personal loan providers, their terms, and minimum required credit scores.

1. Debtmerica Relief

debtmerica
Debtmerica Relief is based in Santa Ana, California. It has been in business since 2006 and helped more than 20,000 clients.

Most debt settlement firms are big on promises but short on details. We love Debtmerica’s transparency when explaining the pros and cons of debt settlement programs and other debt relief strategies.

Find more details and users reviews in Debtmerica Relief SuperMoney profile.

Pros

  • Debt reduction typically ranges between 45% and 60% of enrolled debt
  • Competitive fees
  • Member of the American Fair Credit Council (AFCC)
  • Debt consultants are certified by the International Association of Professional Debt Arbitrators (IAPDA)
  • A+ rating with the Better Business Bureau

Cons

  • Minimum debt of $7,500

2. National Debt Relief

National Debt Relief
National Debt Relief is a debt settlement company based in New York City. Since it was founded in 2008, it has helped more than 100,000 families resolve over $100 million in unsecured debts.

Find more details and users reviews in National Debt Relief’s SuperMoney profile.

Pros

  • Average debt reduction of 50% (30% after fees)
  • Competitive fees (average of 20%)
  • Member of the American Fair Credit Council (AFCC)
  • Debt consultants are certified by the International Association of Professional Debt Arbitrators (IAPDA)
  • A+ rating with the Better Business Bureau

Cons

  • Minimum debt of $7,500
  • Does not accept certain unsecured loans, such as car repair bills, insurance policies, and recent cash advances

3. Accredited Debt Relief

Accredited Debt Relief
Accredited Debt Relief is based in San Diego, California, and was founded in 2008. It has a flexible monthly payments program and offers a wide selection of debt relief services, such as credit counseling, debt management, and debt consolidation.

Find more details and users reviews in Accredited Debt Relief’s SuperMoney profile.

Pros

  • Wide selection of debt relief services
  • Flexible payments
  • Competitive rates (18% to 25% of enrolled debt)
  • Member of the American Fair Credit Council (AFCC)
  • Debt consultants are certified by the International Association of Professional Debt Arbitrators (IAPDA)
  • A+ rating with the Better Business Bureau

Cons

  • Does not provide tax debt relief
  • Not a direct service. Accredited Debt Relief matches customers to a network of partners

This option only makes sense for debt consolidation if your interest rate will be lower than your current overall rate. It’s also important to recognize that many lenders charge loan origination fees from 1%-6%, so be sure to factor this into your borrowing decision.

Debt consolidation: balance transfer cards

Are you enticed by the lure of balance transfer cards? Some major credit cards offer low interest rates – or even 0% during an introductory period – making them tempting vehicles to consolidate debt. A balance transfer arrangement is likely a consideration if you can pay off the entire amount in year or two. Here’s why:

These cards typically offer a 0% (or low interest) APR for 12 to 21 months. Once that period is up, though, you’ll likely be charged a high interest rate, which averages 18.5% on these cards.

Also keep in mind that balance transfer credit cards typically charge a transfer fee that ranges from 3%-5% of your debt balance. If you’re transferring $15,000 in debt, you could pay anywhere from $450 to $750 in upfront fees.

Three of the best balance transfer cards

Taking into consideration balance transfer fees, the length of the 0% APR balance transfer period, and standard interest rates, following are three of the best balance transfer credit cards.

1. Citi Simplicity

Best Balance Transfer Credit Cards - citi-simplicity_toe

Citi Simplicity has the longest 0% APR period of all balance transfer credit cards. As such, it offers the largest potential for saving money on interest payments.

Simplicity is true to its name. It doesn’t have late fees or an annual fee either. However, it does charge a 3% transfer fee.

The standard rates for this card vary from 13.24—23.24% APR based on your credit.

Find more details and users reviews in Citi Simplicity SuperMoney profile.

 Pros

  • 21 months 0% APR intro period, longest of reviewed cards
  • No late fees or penalty APR
  • No annual fee
  • You can transfer other types of debt besides credit card debt, such as student loans and auto loans
  • Free monthly access to FICO scores
 Cons

  • A 3% transfer fee ($5 minimum)
  • No rewards or signup bonus
  • You need excellent credit
  • You can’t transfer debt from other Citi accounts
Example Scenario: $7,000 debt on a credit card with 16.28% APR. If entire amount transferred to Citi Simplicity card:

  • Minimum savings: Save $1,784 in interest even if you make no other payments during the intro 0% APR period
  • Monthly payment: $343 for 21 months to pay off entire amount interest-free, including the 3% balance transfer fee
Apply Now

2. Citi Double Cash

Best Balance Transfer Credit Cards - citi-double-cash-card_toe

Citi’s Double Cash Card has the second longest 0% APR intro period (18 months) and offers 2% cash back on all purchases. There is no annual fee but you do have to consider a 3% transfer fee. Standard rates range from 13.24-23.24% APR.

Find more details and users reviews in Citi Double Cash Card SuperMoney profile.

 Pros

  • 18-month 0% APR period
  • No annual fee
  • High rewards rate (2% cash back)
 Cons

  • 3% balance transfer fee ($5 minimum)
  • 3% foreign transaction fee
  • 5% cash advance fee ($10 minimum)
Example Scenario: $7,000 debt on a credit card with 16.28% APR. If entire amount transferred to Citi Double Cash card:

  • Minimum savings: Save $1,499 Save $1,784 in interest even if you make no other payments during the intro 0% APR period
  • Monthly payment: $401 for 18 months, to pay off entire amount interest-free, including the 3% balance transfer fee
Apply Now

3. Chase Slate

chase-slate_toe

Slate is the workhorse of balance transfer cards. It’s the only balance transfer card that doesn’t charge a fee on balance transfers. The only catch is the $0 transfer fee only applies to transfers made within the first 60 days of opening an account.

Once the intro rate expires, rates vary from 13.24-23.24% APR depending on your credit.

Find more details and users reviews in Chase Slate SuperMoney profile.

 Pros

  • 15 months of 0% APR on purchases and balance transfers
  • No annual fee
  • No transfer fees on balance transfers made within the first 60 days
  • Free FICO score every month
  • No penalty APR
 Cons

  • No rewards
  • No signup bonus aside from the 0% APR
  • Maximum debt transfer of $15,000
  • You can’t transfer debt from another Chase account
  • And you need a credit score of 690 or higher to qualify
Example Scenario: $7,000 debt on a credit card with 16.28% APR. If entire amount transferred to Chase Slate card:

  • Minimum savings: Save $1,425 in interest even if you make no other payments during the intro 0% APR period
  • Monthly payment: $467 for 15 months, to pay off entire amount interest-free
Apply Now

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