Credit card consolidation can be a beneficial way to pay down debts. If you are considering this avenue, make sure that you get the lowest interest rate and the best terms available. Below are the ways in which you can use consolidation to achieve one low monthly payment:
By putting your house up for collateral, you can obtain a consolidation loan. Consolidation loans allow you to pay less interest, and make a lower payment than the combined total of all your credit cards.
Caution should be exercised when taking out a home equity loan to consolidate your credit card payments, because you stand to lose your house if you can't make the payments. A good rule of thumb is to close all but one credit card account so that you aren't tempted to add even more debt.
This is another method to consolidate your credit card bills. Basically, you apply for a card that offers a low introductory rate and transfer all your other balances to that card.
Be aware that this "teaser" rate only lasts for a limited time, and will return to normal interest rates at the end of the introductory period. Before it converts to the regular rate, you can transfer your balance to another card with a low introductory rate.
Using balance transfers to consolidate your credit card debt often brings added costs in the form of transaction fees. Read the fine print to see how much it will cost you to make the transfers from each of the other credit cards. Be sure to make your payments on time, as late payments often raise your interest rate to the normal rate charged.
When using balance transfers to consolidate your credit card balances, be sure to close old accounts so that you aren't tempted to use them. Failure to do so can leave you even deeper in debt if you rack up new charges.
If your credit card debt is out of control, you can lower your payments by up to 57% using a consolidation service. Consolidated loans are not for everyone, though. Before you make a decision, you must realistically look at the pros and cons of debt consolidation to determine if this is the right decision for you.
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