Buried in Christmas debt? Look to consolidate your debts

NEW YORK (AP) — So maybe you shouldn’t have purchased that 55 inch TV for your toddler or given a diamond incrusted collar to your corgi for Christmas.

Now you’re saddled with thousands of dollars in credit card debt from the holidays, collecting interest at 18 percent or more.

Never fear, there are a few ways to pay off that credit card debt in less costly ways.

ZERO INTEREST, WITH A CATCH

Many credit card companies offer zero-interest balance transfers to new and existing customers after the holidays. That way you can pay off the debt without incurring any interest, typically with a grace period of 12 to 18 months. But if the balance isn’t paid off in that period, the remaining amount is subject to high credit card interest again.

Watch out for balance transfer fees, however. A typical credit card issuer will charge roughly 3 percent to transfer a balance. There are some credit cards that do promotional zero-fee balance transfers like Slate by JPMorgan Chase.

TAKE OUT A PERSONAL LOAN

Several online lenders now offer lower interest debt consolidation loans to eligible borrowers, like SoFi, Marcus by Goldman Sachs, Lending Club and Prosper.

Most online lenders can offer loans as low as 7 percent. But since they are unsecured loans, borrowing from these companies can have interest rates similar to or higher than credit cards. The loans come with the advantage of consolidating your payments into one place, with one steady payment, and a three to five-year plan to pay that debt off.

HOME EQUITY

With the housing market mostly recovered from the crisis, banks are more likely to offer home equity lines of credit than ever before. The interest rate on a home equity line of credit can be as low as 3 percent. However they are effectively a second mortgage on your house and should only be used for large, unexpected expenses.

DON’T REPEAT YOUR MISTAKES

If you do consolidate your debts, the most important thing is to not run up your credit cards again. Then you’ll be saddled with both the debt consolidation loan and new balances on the cards.