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How to Consolidate Credit Card Debt

Getting into serious debt is one of life’s most stressful events especially since the recession of 2007. Here is some advice on helping to reduce your monthly debt repayments by consolidating all your credit cards into a single loan.

The easy credit of the early part of this century meant that multiple credit card ownership became the norm. It was not unusual for us to have four, five or more credit cards in our wallet at any one time. We played each one off against the other and as new companies continually bombarded us with special 0% interest transfer offers. Even students and people with zero credit rating were not spared.

There are now over 600 million credit cards circulating in the USA, an average of 3.5 for every man, woman and child in the country. Credit card debt has reached a staggering $2.5 trillion (that’s a lot of zeros!).

The good news is that, now the flood of cheap money has dried up, credit card debt is falling for the first time in 8 years. It is still the case that the average credit card user still owes $5,000 and with interest rates at around 14% this is still not ideal.

The Benefits of Consolidating your Credit Card Debt

If you are still in control of your credit card debt, but own multiple cards, now is the time to consolidate your debt. Consolidation simply means taking all your existing credit card accounts and replacing them with a single card or loan payment. This relatively simple action will benefit you in many ways:

There can be substantial savings if you can lower your rate by consolidation
Costs will be lower. Write only one check a month
Payments become simpler with only one statement, one card and one rate of interest to worry about – you are less likely to miss payments and to incur the late fees involved
By consolidating wisely you can decrease your monthly outgoings and improve your credit rating over the longer term
If your long term goal is to wean yourself away from credit cards completely, consolidation can reduce the time needed to pay off all your debt

How to go about Consolidating your Credit Cards

There is a lot of help available to those of you wishing to consolidate your credit card debt but you can take the first steps yourself.

Make a list of all your current credit cards, the debt level on each and the interest rate each card is charging. Those charging the highest rates will now be obvious. There will now be several routes open to you to consolidate this debt into a single amount.

Home equity Loan – if you are a homeowner it is likely that you can take out a loan with a much lower interest rate than you are currently paying.

A Bank Loan – if you have a good credit rating you are likely to be able to get a low interest loan from your bank.

A single card – if your credit rating is not so good, or your credit history is too short (for students or those who started borrowing later in life) a single, low interest rate card may be the only option. 0% credit cards are now much rarer than they used to be but the bottom line is, the card company wants your money! If you are moving all your amounts to a single card they may be willing to offer a good low rate, at least for an initial period. Bear in mind this will most likely rise later.

Help with Credit Card Consolidation

If you are feeling overwhelmed by the task ahead of you, there are organization that can help you with your credit card debt. In the USA the American Consumer Credit Counselling is a non-profit credit counselling agency that helps consumers take control of their finances. They can help organize an effective credit card consolidation plan for you.

At the end of the day, it is up to us all to realise that the era of easy money is over. Consolidating your credit debt should be looked upon as the first step to weaning ourselves off the dependency on credit cards so that, one day soon, we can take those scissors and free ourselves from the tyranny of their astronomical interest charges and get our financial lives back on track.

1 comments - what do you think ?

Rodiet Gay Says:

Asking for a credit card debt consolidation from a legitimate debt settlement company is just the perfect to solution to manage large amounts of debts. It is much safer to consult someone who is more knowledgeable that deals with financial matters. Any person would never want to end up in a bankruptcy due to miscalculations.

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