Debt consolidation is a process where you take out a new loan to pay off multiple, existing debts. This can be done with a personal loan, balance transfer credit card or home equity loan. After consolidating your debt, you will only have one monthly payment to make instead of several.
If you consolidate your debt with a personal loan, you will no longer be able to use your credit cards. This is because the personal loan will be used to pay off your credit card balances in full. Once the balances are paid off, your credit cards will be closed and you will no longer have access to them.
If you consolidate your debt with a balance transfer credit card, you will still have access to your credit cards but their limits will be reduced to $0. This means that you can only use your credit cards for emergencies or unforeseen expenses. It is important to note that most balance transfercredit cards charge an annual fee and some also have a balance transfer fee so it is important to compare different offers before deciding which one is right for you.
If you consolidate your debt with a home equity loan, you may still be able touse your credit cards but it depends on the terms of the loan agreement. Some lenders may require that all existing debts be paid off in full before they allow any additional borrowing against the equity in your home while others may allow limited use of credit during the repayment period. It is importantto check with your lender beforehand so that there are no surprises down the road