Should You Consolidate Your Credit Card Debt?
You probably get flooded by ads everyday for credit card debt consolidation deals. Whether on TV, mail or email, they are out there and they want you. Let's face it, if you are a spender and use credit cards, then you are in their target market. But before you run for the hills from these ads because of their slick look, there are some benefits that you can gain from credit card debt consolidation if you choose wisely.
Anyone who has read any newspaper articles on credit card debt would already know what credit card debt consolidation is. However, just for the benefit of others, credit card debt consolidation, in simple terms, is the process of consolidating debt which you hold on various high APR credit cards onto just one low APR credit card.
Again, you must use your card correctly, but if you do, and you get a good rate, then this can be beneficial for you in your effort to get rid of your credit card debt for good. Here are some things to look for in getting the best deal.
Initial APR: This is usually the grabber. Pay 0% for some intial number of months, often 6 to 9 months, but sometimes more. Again, this can get you started if you are serious about paying off your debt.
Standard APR: If you are going to take more than the initial 6 to 9 months to pay off your credit card debt, then you need to look carefully at this rate. Clearly the credit card company hopes you will take a long time to pay. That is where they make their money, in addition to you spending more with your card, which I hope you don't do.
0% on purchases: This is another common benefit from credit card debt consolidation. The 0% interest (or some lower percentage) on purchases is offered as an incentive for credit card debt consolidation. This credit card debt consolidation benefit is again applicable only for a short initial period.
Easy management: What I like most about consolidating credit card debt is that it makes it easier to see your balance decreasing. (You are paying your debt off, right?) With one card and one balance, you can track your progress more easily.
Other benefits: Credit card debt consolidation might bring you some more benefits in terms of rebates, discounts and reward points, especially if you move to a co-branded card as part of credit card debt consolidation.
So once you get your old balances paid off, hopefully you have cut up those cards, because once these balances are zero, that is when the real test begins. Are you going to dig yourself a mucher deeper debt hole by using these cards again or are you finally committed to ridding yourself of credit card debt for good. If you are going to get rid of it, then a credit card debt consolidation can be a big help in achieving your goal.
Author Paul McDermott shares his experience with consolidating credit card debt and other credit and debt issues at Credit Card Debt. Learn about his mistakes so you can avoid them.
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