Credit card debt consolidation
Credit card debt is a nightmare of a problem and
unfortunately there a lot of people who face this today (and if
others don’t pay heed, they might get trapped into credit card
debt too). Credit card debt consolidation is generally regarded
as the most important step in credit card debt reduction and
elimination.
So what is ‘Credit card debt
consolidation’?
Credit card debt consolidation is the process/strategy to
consolidate debt from multiple credit cards into lesser number
of credit cards (ideally one or two credit cards). Credit card
debt consolidation is sometimes also referred as a balance
transfer where you transfer your balance on one credit card to
another credit card. Generally, the balance transfer (or credit
card debt consolidation) is done from credit cards with higher
APR to credit cards with lower APR. Credit card debt
consolidation can also be achieved by going for a bank loan (at
a lower interest rate) and using that towards paying the debt
on the higher APR credit cards. This loan is then paid-back to
the bank in the form of monthly instalments.
As you would have noticed, a lot of credit card suppliers
and banks keep coming out with attractive offers for Credit
card debt consolidation (or balance transfers). There is no
dearth of 0% APR offers for credit card debt consolidation.
However, credit card debt consolidation is a serious exercise
and you must exercise caution so that you don’t get into deeper
trouble. When going for credit card debt consolidation, you
must properly analyze the offers from various banks and credit
card suppliers. Check the time period for which 0% APR is being
offered and also the APR that would be applicable after the
lapse of that period. Generally, 0%APR is valid for a 6-12
month period only. So, if you are confident of paying back a
considerable amount of debt in that period, this kind of credit
card debt consolidation will work for you even if the APR (post
0% period) is a bit higher. However, if that is not the case,
the long term APR is going to be the most important thing for
you. If the long term APR is more than the APR for your current
credit card, this kind of Credit card debt consolidation will
be futile for you. Also, check processing charges etc before
you actually go for balance transfer or credit card debt
consolidation with another supplier/bank. Another good idea is
to check with your current credit card supplier and see if they
can offer a lower APR to you in order to help you in clearing
off your debt (you would be surprised that they do oblige at
times and hence eliminate the need for credit card debt
consolidation).
It’s important that, with credit card debt consolidation,
you also inculcate good spending habits; otherwise credit card
debt consolidation would really be of no use to you.
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