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Credit Card Consolidation Done Right

EasyLearn | Sep 23, 2009 |

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There are two main reasons for credit card consolidation. One is because you have so many cards you are losing track of when bills are due running up large late fees, or because you can save money by consolidating. Both of these reasons are valid and both should be considered when you're looking to reduce the number of credit cards you maintain.

Credit Card Consolidation By Finding A New Credit Card

The most commonly thought of way to consolidate is by finding a new card carrier. What you need to do with this is first decide on your goals. If you wish to resolve debt quickly you'll want to find which card or series of cards (you can use more than one) that absolutely minimizes your interest rate. Now remember most rates are introductory so you want to find the best time line that fits when you'll have the cards paid off. If you think it will only take you 6 months to be out of credit card debt find the cards with the 0% or 1.9% introductory APR. If you think you need 5 years find the cards with the lowest normal APR and no yearly fees.

However, if the reason you want to consolidate is to make your payments easier, find the single card that will handle all of your balances with the largest widow for payment may be your most ideal.

Credit Card Consolidation Loans

Another good idea for reducing your payments, getting out of debt faster, or making your payments easier is to get a consolidation loan. These loans can either be done as a personal loan with a bank or by doing a home equity loan using your house as collateral. The personal loan is nice because it is easy and requires no backing however, the interest rates may not be much better than your credit cards. The home equity loan should get you a better interest rate than most credit cards and allow a really low payment because you can have a very long payment term length.

When considering a loan transfer to a fixed rate style like the home equity loan you will be freeing up all of your credit cards allowing you to spend again. If your true goal is to get out of debt make sure and close your credit card accounts or at least destroy the cards. The easiest way to win a war of will power is to not put yourself in a situation to fail.

With any of the options make sure you consider factors like balance transfer fees, annual fees, loan origination fees, and late fee potentials because just saving on interest rates or making your payment lower is not always the only thing that matters.