Is Credit Card Debt Consolidation A Good Idea?
When trying to get out of credit card debt, it is often a popular idea to consolidate that credit card debt onto another credit card. The idea works like this: you apply for a credit card that has a big enough limit to allow for all your other credit card debt and then you just transfer the debt onto that card. However, is credit card debt consolidation a good idea? Yes and no. It's good because it allows you to pay off those credit cards that may be seriously overdue. However, it doesn't alleviate the debt because now you just owe one card instead of several others. It is good in the long run, however, if you make payments on time and you work to pay off the debt. But you have to be careful of a few things that we'll mention here.
Interest Rates
When choosing a card for credit card debt consolidation, make sure you are getting a card with a low interest rate. The idea situation would be a card that has a zero percent interest rate for a certain period of time. Then, if you can pay the card off in that time without accruing interest charges or penalties, that would be fantastic! Also, make sure the credit card that you're choosing for your credit card debt consolidation doesn't penalize you for transferring too many other debts onto that card. If that happens, you could be stuck with an even bigger debt than you started with.
Special Consolidation Offers
There are cards offered by some credit card companies made specially for credit card debt consolidation. Look these over and make sure you compare and contrast before you just go ahead and sign up for one. Take the one that offers the best deal. Remember, you're trying credit card debt consolidation to clean up your credit, you don't want to get in deeper than when you started. When you find a card you like, transfer your debt and pay your bills on time. That is the only way you'll ever get out of credit card debt.
When transferring your debt onto another card, you'll want to pay more than the minimum required payment. Credit card consolidation allows you to transfer your debt but if you don't pay the card off in time, the debt will grow bigger. By paying more than the minimum, you'll pay your debt off faster and you'll be that much closer to total debt freedom.
