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Credit Card Consolidation Loans Tips, Info & FAQs
A loan that combines balances from multiple credit cards into one card.
A credit card consolidation loan can help you save money by reducing your interest rate, making it easier to pay off your credit card debt faster. Depending on your credit profile, a credit card consolidation loan can also help improve your credit by showing that you can make on-time monthly payments and reduce your total debt (as long as you’re not adding any new debt).
Understanding the Credit Card Trap
Did you know the average American household carries $6,358 in credit card debt?
If that isn’t alarming, consider this: A debt of $5,000 with an average interest rate of 24.99% where only the monthly minimum payment is made can accumulate $4,823 in interest over five years. It means you’ll pay nearly double the amount you spent!
Let’s take a look at credit card usage to learn how to stay in the clear.
The minimum payment mindset
Here’s how most people get trapped in credit card debt: You use your card for a purchase you can’t afford or want to defer payment, and then you make only the minimum payment that month. Soon, you are in the habit of using your card to purchase things beyond your budget. Since you’re making only the minimum monthly payment, it won’t seem to matter much if your credit card balance gets a bit larger.
When you’re trapped in this mindset, your balance barely budges. A minimum monthly payment on a $5,000 debt generally amounts to $150. But, only $47.30 of that goes toward the principal of your debt. The rest goes toward interest.
Credit scores and prolonged debt
Typically, the more of your available credit you’re using, the lower your score will be. If you’ve fallen into the minimum payment trap, there’s a good chance you’re using most of your available credit and hurting your score.
Another important part of your credit score is the trajectory of your debt. If you’re barely making progress on your balance, you won’t score high here, either.
A low credit score can make you ineligible for a mortgage, auto loan or employment opportunity. At best, it will result in higher rate if approved, which means paying more in interest.
Should you throw out your credit cards?
Keep some accounts open and active to maintain a healthy credit score; however, use your cards responsibly.
First, be careful to avoid the minimum payment trap. Live within your means and stay clear of mounting credit card debt. Before using your card, ask yourself if it’s worth paying double its price in interest and possibly harming your financial health.
Second, if you’re carrying a large credit card balance, work on paying more than the minimum due.
Third, use your credit cards for non-discretionary payments. This way, you’ll be keeping your accounts active without running the risk of overspending. Remember to pay your bill on time to avoid interest.
Finally, consider consolidating your balances to a lower-interest rate card. While the current rate on a typical Capital One card is 24.99%, a United Texas Credit Union credit card starts at an interest rate of less that half of that. You’ll pay much less in interest charges, and make progress towards paying off your balance much faster.
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FAQs
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How can I benefit by doing this?
Credit card consolidation can help save money in the short term and the long term. In the short term, you might end up paying less each month than you did with multiple different minimum payments, keeping more money in your pocket. In the long term, you might get a more favorable interest rate and pay less interest over time as well.
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Do you pay off my existing credit card debts?
Yes, we’ll help you get your existing credit card debt paid off and applied to your new United Texas Mastercard. You’ll then have the convenience of one monthly credit card payment.
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Are there any prepayment penalties?
No, you have the flexibility to prepay without penalty.
Next Step
Go to Next StepCredit Card Consolidation Loans Rates & Calculator
Loan Calculator
For an accurate determination of your options, please click on the red "Apply Now" button, complete our short application, and see your credit card consolidation loan offers, with no impact to your credit.
Information and interactive calculators are made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy or their applicability to your circumstances. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Platinum Mastercard®
Platinum Mastercard® | as low as 14.25% APR* |
*APR = Annual Percentage Rate. Rates are effective as of August 1, 2023.
Minimum interest charge = None. Available APRs: 14.25%, 17.99% (all variable)
Starter Mastercard®
Starter Mastercard® | 17.99% APR* |
*APR = Annual Percentage Rate. Rate effective as of August 1, 2023.
Minimum interest charge = None.
Next Step
Go To Next StepCredit Card Consolidation Loans Why United Texas
Credit Card Consolidation Loans
- Complete our short application and see your pre-qualified credit card consolidation loan offers, with no impact on your credit.
- Competitive variable rate based on the Prime Rate
- Pay off your debt faster and save money with a lower rate
- Enjoy the convenience of one payment towards your debt
- Fast application turnaround
Reviews
As we know "things are tough all over" interest rates are at an all-time high and borrowing capital is more expensive than ever. That said, United Texas Credit Union or should I say, our bank of 30 years :) helped our family with a debt consolidation loan to pay off higher interest credit card debt. Our Interest went from 29% to 9% based on our credit. I would like to publicly and personally thank Assistant Branch Manager Karina Hernandez for working closely on our request, you have made my father, a retired USAA employee and a 78 year old senior citizen's finances manageable during these harsh economic headwinds. Finally I would like to close with being a member at UTCU has been a blessing to our family time and time again. If you're thinking about a bank with heart...well, you just found them. Thank you UTCU! Great doing business.
Thank you so much for letting us know about your five-star experience with Karina. We are honored to have you as loyal United Texas Credit Union members for these past 30 years, and we look forward to serving you in the future. - Karla :)
Review Credit Card Consolidation Loans from United Texas
Next Step
Go To Next StepCredit Card Consolidation Loans How it Works
Getting a Credit Card Consolidation Loan with us is fast and easy:
Here are the simple steps:
STEP 1
Contact us in person, online, or by phone and complete a quick loan application to see your pre-qualified credit card consolidation loan offers, with no impact on your credit.
STEP 2
Open a savings account with a $5 minimum opening deposit if you are NOT already a member of United Texas.
STEP 3
Sign your loan documents in person or electronically.