Unfortunately in today's economy too many of us are swimming in credit card debt
that seems nearly impossible to pay off. Monthly finance charges are often a
significant part of what we're paying back when we make our minimum monthly payments.
Fortunately there are ways you can consolidate your credit card debt and pay down
your credit cards to enable you to start saving money on a regular basis.
Benefits of Consolidation
Not only does consolidating your credit cards help you pay more towards your balance
but it also offers the following benefits:
- if you have consolidated your credit card debt you are not as tempted to use
your credit cards for everyday necessities, but only for emergencies
- your finance charges tend to stop because if you consolidate you're less likely to
use the cards you've included in the consolidation
- one low monthly payment can help pay off several credit cards instead of paying off
only monthly finance charges with monthly payments
- your monthly payment stays consistent versus changing every single month
- you can improve your credit record
even if you've had a challenge paying individual bills to each credit card company
- you can pay off those high interest cards and possibly take advantage of tax benefits
at the same time
Things To Avoid
It's very easy to fall into the trap of paying only minimum monthly payments on our
credit cards, but unfortunately too often this does little more than pay off those monthly
finance charges. In addition, paying only monthly minimums often results in late payment fees
(it's easy to put it off for a week) which can further increase your monthly payments.
© iStockphoto.com - sjlocke
Making The Most of Consolidation
are the secret to making sure that your credit card consolidation
works for you. Most credit cards have very high rates (from 8% to 22%)
while a consolidation loan may offer
(a) a lower rate or
(b) a flat monthly fee
Either of these options allows you the flexibility to save money since you'll be making
a lower monthly payment than paying on 3 - 4 credit cards at one time.
Types of Consolidation
Consolidation can take on several forms:
- a credit counseling firm can help you consolidate
- there are many reputable firms out there!
- taking advantage of the equity in your home
- not only does this option help you lower your debt but it may also offer some tax benefits
- Moving to a 0% interest rate credit card
- While this may not be your best bet it is an option
We discuss the options in more detail in our next article,
A New Financial Life
Through Debt Consolidation, and you will want to make sure to check it out. Regardless
of which method you choose to consolidate your credit card debt you will be
pleasantly surprised at how quickly you're able to pay off the debt. Don't fall into the
trap of continuing to use cards once you have made the decision to consolidate, to do so
only will mean you'll have to repeat the process again!
See also: FTC.gov's Guide To Debt and Bankruptcy,
I Need Money
Related topics: A New Financial Life Through Debt Consolidation,
Why Consolidate Credit Card Debt?