?Credit card debt consolidation? is a phrase that you must have come across many times. There are hundreds of sites with advice on credit card debt consolidation. Every now and then your favourite newspaper will also contain an article or advise on credit card debt consolidation. TV channels host discussions on credit card debt consolidation. Moreover, there are numerous consultants and companies that provide professional advice on credit card debt consolidation. So what is this ?Credit card debt consolidation? that everyone is talking about? Why is it such an important topic?
?Credit card debt consolidation? refers to consolidation of the debt on various credit cards into a single credit card (or a couple of credit cards). Generally, you move from a higher APR credit card to a lower APR one. You might ask ?why?? If you look into how the vicious circle of credit card debt works, you will immediately understand the logic behind that. Credit card debt grows in 2 ways. One is due to addition of new debt on account of fresh spends on your credit card and the second is due to addition of interest charges to the existing credit card debt. The first one is due to your use of credit card but the second one is due to interest charges which are calculated on the basis of the interest rate or the APR applicable to your credit card. So a lower APR rate means that your credit card debt will grow at a slower pace and hence switching over to a card with lower APR makes perfect sense.
The process of credit card debt consolidation is also referred to as balance transfer process (you transfer the balance or debt from one credit card to another).The credit card debt consolidation (or balance transfer) offers are made even more attractive by the credit card suppliers by associating various benefits with them. The simple logic behind offering these benefits is the fact that such a customer would be defecting from one of their competitors. The biggest benefit offered by these credit card suppliers is 0% interest on balance transfers (or credit card debt consolidation). This 0% APR is generally applicable for a short period of time i.e. 3-6 months, after which the standard APR is applicable. Other credit card debt consolidation offers include things like interest free purchase for a short period, reward points, etc. These credit card debt consolidation offers make the exercise of credit card debt consolidation even more logical and meaningful.
Credit card debt consolidation seems to be a good way of tackling the problem of credit card debt and that is the reason why there is so much of discussion on the topic of Credit card debt consolidation.
Sco
Rep Points: 3
Credit card debt consolidation is a general term that could take several meanings. When most people think of debt consolidation, they think of those companies with the commercials featuring people in desperate situations, worrying about how they are going to pay their credit card bills. Then their company comes to the rescue, consolidating the credit card debt and allowing the poor individual to pay only one bill per month at a lower interest rate, etc. The commercials do not tell you that they have to close your credit card accounts in order to negotiate a deal (sometimes including a lower payoff amount) with the credit card company. This is a good solution for some people, but in many cases, it is a bad idea. This type of consolidation, also known as "debt settlement," has a negative effect on one's credit rating.
Credit card debt consolidation could also refer to a loan. The loan could be a personal loan, a home equity loan, or a loan specifically for credit card debt consolidation. To get a loan like this, you should make sure you have good credit and all your accounts are in good standing. If that is not the case, you will either be denied the loan, or you will get a bad deal, like high fees or adjustable interest rates.
Thirdly, credit card debt consolidation could mean transferring the balances of cards to one card. Make sure that you have available credit on your card in order to do this. Also, try to get low or no-fee transfers and a low interest rate. Ask for an incredible deal, and you just might get at least a good one.
MHJ
Rep Points: 85
When it comes to credit card debt consolidation most people find this the most practical course of action in terms of eliminating the number of bills they have to pay each month. The one thing to pay attention to is the interest rates. If the APR is too high then this becomes self defeating
