The Case for Debt Consolidation


The first step toward clearing your credit card clutter is to assess the situation.  Make a complete list of your accounts and balances.  If needed, obtain a copy of your credit report.   You can obtain one free credit report each year from  If you are at or close to the limit on your cards; are struggling to pay the monthly minimum; or if a job loss or emergency bill would wipe you out, consider consolidating.

Consolidating your credit card bills into a single loan can be a wise financial move. Debt consolidation can lower your overall interest costs, reduce your monthly payoff, eliminate late fees and over-the-limit charges, and allow for one convenient monthly payment. On paper, it’s a no-brainer.

The next step is to consider your financial behavior.  Many Americans spend unconsciously, using money and credit to distract themselves from their lives. Some people get a loan to pay off old debts yet continue buying more than they can afford. The inability to control their spending only makes their financial troubles worse. However, if you’re ready to straighten out your credit snarls and be very mindful about your spending, then consolidation can work for you.

For instance, taking four $3,000 card balances at 19%, 18%, 17%, and 16% and putting them into one loan at 10% would save about $43 a month in interest payments. If you save that $43 instead of spending it, you’d have $1,500 in three years.

The most common methods for consolidation include:

A Personal Loan:  Consolidating debt into a personal loan, at a rate lower than your credit cards, can offer significant savings on interest payments.  As with any loan, the interest rate is determined by your creditworthiness but may be significantly less than credit card interest rates.

A Low-Rate Card:  Transfer accumulated high-interest credit card debt to a lower-interest credit card here at San Antonio Citizens Federal Credit Union.  Our Visa credit card has many benefits:

  • No balance transfer fees
  • No cash advance fees
  • No annual fees
  • 9.90% APR – purchases
  • 9.90% APR – cash advances or balance transfers

A Home Equity Loan:  For homeowners, this may be the best way to reduce interest costs. Rates on a second mortgage are lower. Also, mortgage interest can be tax deductible. 

GreenPath Financial Wellness:

  • Arrange lower rates and longer paybacks with your creditors
  • Improve your credit score
  • Navigate student loan repayment
  • Learn about financial topics from housing to financial planning

Managing your finances requires diligence and organization. If this is too difficult for you to do alone, take advantage of your credit union membership and use the services we have available to you.   We are your financial home, and our mission is to help all our credit union members thrive.