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Consolidating Credit Cards
Credit card consolidation is a popular solution for those with
significant credit card debt, usually distributed on three or
four different cards. Basically, this means putting all your
debts together on a single card, like transferring it all to one
loan. Of course, the goal is to pick a card that offers better
conditions than what you already have, in order not only to
simplify, but also to reduce your payments.
Since there are so many offers out there, and lenders fight
over your business, you can sometimes find solutions that can
save you thousands of dollars per year. If you consolidate your
debt to a credit card with low interest and 0% balance transfer,
you can save considerably, and pay off your credit sooner (which,
of course, is the main goal when dealing with credit card
debt).
The most serious mistake people do when consolidating is to go
though the entire process just to simplify their accounting, and
they don't pay enough attention to how much they could save.
Another mistake is to close your zero balance accounts when
consolidating. This practically means you close some of your
credit options, which is never a good idea.
When you plan to consolidate, call your banks and explain the
situation. They want your business, and you'll be surprised how
flexible and willing to negotiate they can be, once you explain
to them that you have various options available to take your
business someplace else.
There are many web sites offering solutions for debt
consolidation. However, keep in mind that, while this is a
comfortable and fast solution, you don't have the options to
negotiate directly with the banks. Also, most often the best
offers come from banks that want to keep your business, so make
sure you give a change to the banks you've had a long-term
relation with. If you're not pleased with the results, take your
money elsewhere quickly.
Consolidation is often a necessity for students, new
graduates, or people who have filed for bankruptcy some time ago.
If you've handled your payments well and managed to clear up your
record to a certain degree, there is no need to continue paying
more than it's worth for your credit cards. Sit down and go
through the numbers carefully, and think analyze the problem
realistically. Don't forget to check your credit report and your
credit rating before you start anything - it will help you plan
and plead your case. Also, if your credit request gets rejected,
don't forget to ask for your free copy of the credit report.
Of course, credit card consolidation is not a miracle solution
for all your financial problems. On the contrary, you may find
that it requires a lot of financial discipline to make the
payment on time and to straighten things up. However, it is less
confusing than having several small credits, and so it is easier
to keep things under control.
There is also the option of getting credit counseling, if
things get really confusing. A successful plan will make sure you
make the payments on time and regularly, without putting a strain
on other aspects of your life. Of course, it's a lengthy process,
usually taking one or two years - but it's worth the trouble.
Sometimes, you can lower costs by consolidating your debt
through a second mortgage - but be really careful about the
hidden costs and problems - you may want to consult with a
specialist or two before taking this step. Usually, this means
that your home will become collateral, and you may lose it if
things go wrong. Also, costs add up quickly and you may end up
paying more than you initially thought.
This article has been provided courtesy of Creditor Web.
Creditor Web offers great credit card
articles available for reprint and other tools to help you
search and compare credit card offers.
MORE RESOURCES:
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