Tips on Credit Card Consolidation

If you’re struggling to repay your credit card debt, it might be possible to apply for credit card consolidation. There are several ways you can consolidate your outstanding debts, but the key is to shop around to be sure you’re getting the right deal to suit your needs.

Below are some tips on credit card consolidation and some things to think about when trying to reduce your debts.

Balance Transfers

There are some lenders offering great deals on balance transfers as a form of credit card consolidation. The object behind these types of cards is to roll your outstanding balances over to the new credit card and benefit from the low rates on offer.

When you consider the high rates you’re paying on your balances now, this represents an opportunity to reduce the amount you pay in interest each month. It could also mean you reduce your monthly credit card bill.

If you’re disciplined enough to put your interest savings towards your debt, you could find your debt reducing much quicker than you thought.

Remember that many of these balance transfer offers are for introductory terms only, so try to get your balances down as low as possible before the rate reverts back to a higher rate. Otherwise you could end up back at square one.

Credit Card Consolidation Loans

Not everyone qualifies for a balance transfer credit card. If you fall into this category, it may still be possible to qualify for a credit card consolidation loan.

The interest rate on these types of loans might initially look a little more expensive than the more attractive balance transfer offers available. However they may still be cheaper than you’re paying on your credit card interest rate, which means you’re still saving money.

By consolidating your credit card debts into a single loan, you can streamline your banking a little and make it easier to keep up with your repayments. You’ll have one repayment to think about that should usually be a little less than the combined payments you’re making on your credit card bills.

This can save you money and make it easier to begin a debt reduction plan.

Tips on Credit Card Consolidation Shopping

Before you sign up for a credit card consolidation, spend a little time on some simple calculations. It’s important you understand the effects of rolling your debts into a new loan or balance transfer credit card before you proceed.

Always take a little time to work out whether or not your consolidation efforts will really be saving you money. Add up all your current monthly payments and compare them to the new payments you’ll be making.

Be sure to ask your lender or credit card provider if the rate you’re being offered is just an introductory term and make sure you know what the rate will revert to once the low rate expires.

You should also ensure that you know what fees and charges may apply to your credit card consolidation. Some lenders may charge a balance transfer fee that could increase the total debt amount. You could also be charged fees to set up a consolidation loan, so make sure you know what effect those fees will have on your debt reduction efforts before you sign up.

Category: Personal Budget