If you’re making multiple credit card payments every month and you’d rather make just one, you might consider transferring the balances onto one card, or you might want to take out one loan to pay them all off. If you have equity in your home, for instance, a home equity line of credit, or HELOC, would accomplish that goal. Or you could try to get a personal loan from a bank. Here’s how the process works.

This is for you: If you’re juggling multiple credit card payments every month, you have good credit, and you’d rather make one payment on one large balance.

This isn’t for you: If you don’t have your spending under control. Taking out a loan—especially one that puts your home up as collateral—isn’t the answer to your problems. Work first on setting up a reasonable budget.

Opening a home equity line of credit (HELOC)
Pros: You’ll probably get a lower long-term interest rate on a HELOC than you have on your credit cards. (The average in late January on a $30,000 line was 5.12 percent.)
Cons: If you default on a HELOC, you’re putting your home at risk, so there are big stakes involved. If you lose your job and fall behind on your payments, that’s trouble.

Click here to get it done.

Getting a personal bank loan
Pros: You’ll owe money to only one lender.
Cons: If you don’t put something up for collateral (such as the title to your car, for instance), you probably won’t get an interest rate much lower than what your credit cards are charging. (The average rate on an unsecured personal loan was about 14.39 percent in late January.)

Hands-on time: A couple of hours to compare rates, fill out an application, and process the paperwork necessary to receive your loan.
Total time: In many cases, as little as one business day, or up to 48 hours for most over-the-phone processing.

What you’ll need: (This will vary from bank to bank. Some won’t require all of this.)

• Your Social Security Number


• A photo ID (such as a driver’s license or passport)


• A couple of recent pay stubs


• Your most recent statement from each of the credit cards you’re hoping to pay off


• In some cases, the current balance, account number, and payment address for each of the credit cards you’re hoping to pay off (some banks send loan money directly to the cards)


• A reasonably good credit score (if you look like too much of a risk, the bank probably won’t lend to you)


• Information on major expenses, including mortgage payments, rent, etc.


• Employment history and income, including bonuses, overtime and income from other sources

What to do:
1. Compare rates at banks in your area. (One place to start: Bankrate.com.)

2. Bankrate.com’s results may give you some peer-to-peer lending options, such as LendingClub.com and Prosper.com. Peer-to-peer lending may offer lower interest rates, if you’re approved for a loan (and funded)—but there’s no guarantee that you’ll be funded.

• Both LendingClub and Prosper require that you apply through the site and, if you’re approved, interested lenders (members of the site) can choose to fund all or part of your request. If no one funds your request, you can re-list.

3. Bankrate.com lists some options, but not all, so you may want to poke around on the websites of banks in your area. Look for “personal loans,” or “personal unsecured loans.”

• (Need to find banks in your area? Enter your address into Google Maps, click on “Search nearby,” and enter “bank.” Voila.)

4. You may also want to check with your local credit unions. Try FindACreditUnion.com.

5. Once you’ve found a rate you like, contact the institution to get the ball rolling. (Bankrate lists phone numbers, but you might also use GetHuman.com to get someone on the phone.)

6. Many institutions will offer you the option of visiting a nearby branch, applying online or over the phone. Do whatever makes you the most comfortable. (In-person processing may be quicker.)

7. Make sure you understand the terms of the loan you’re applying for, including length of the loan, interest rate, and fees. A longer-term loan may have lower payments, but you could end up paying significantly more in interest, so do the math. (Try Bankrate’s Loan Interest Calculator.)

8. Ask about all the fees involved. (One fee to avoid, if you can: credit insurance.) If you’re not sure what you’re paying, ask the lender to explain it.

9. Depending on the lender and your credit, the lender may send payments directly to your creditors rather than cutting you a check.

10. Your loan approval may be instantaneous or could take 1 to 2 business days. You may be required to visit a nearby branch to sign the paperwork.

11. Do not use this money to go to Vegas. Pay off your credit cards, then make on-time payments on your loan.

12. Live happily ever after.

To learn more:
The Return of the Personal Loan (MSN Money)

Did you do it? Tell us what worked or share other tips in the comments below.

Who helped: Greg McBride, senior financial analyst for Bankrate.com

Note: This is the second article that's part of a series on how to pay off credit card debt. Check back next week for part three.

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