Allowing credit card debt to pile up can be a disaster, and today millions of people around the world are in over their heads when it comes to this particular debt. Instead of feeling trapped, as if no solution exists, you might consider credit card debt consolidation. For many, this has proven to be a highly beneficial solution, but some factors need to be considered.
Advices for starters
For starters, you need to understand what credit card debt consolidation involves. Simply put, this service is a process that makes it possible for all credit card debt to be rolled into one debt. In other words, outstanding balances from multiple credit cards can be transferred to one new credit card or consolidated through a bank loan. Typically, credit cards with a high Annual Percentage Rate would be candidates for credit card debt consolidation and capable of rolling the balances to a card with a lower APR.
The other option is to take outstanding card balances and having them all paid off with a low-interest bank note. In both instances, the credit card debt consolidation would then be paid back in monthly installments, with the goal of having the payments lower than before. The challenge is that card companies and banks advertise all types of special offers for credit card debt consolidation, such as 0 percent APR, but you need to be careful.
Determine your purposes!
Remember, credit card debt consolidation is a serious matter, and while a 0 percent APR might look good, often regulations hide behind the offer. After all, the purpose of consolidation debt is to get ahead, not to end up in a worse situation. If you find a credit card or bank offering 0 percent APR for credit card debt consolidation, the first thing you need to do is look at the period of time that offer is for. Often, the 0 percent interest rate is only for six to nine months. Now, if you can pay off the entire balance in that time, great! Yet most people need more time.
The problem with this scenario is that after the six to twelve month period, the 0 percent APR skyrockets much higher than what you had been paying. This means for credit card debt consolidation, you are now in deeper grounds, financially. Another thing to watch for if you want to consider credit card debt consolidation is the processing fee. Some card companies will provide 0 percent APR but when looking at the terms and conditions, you see that they charge a huge processing fee to transfer balances.
Start with your credit card company!
One of the best ways to deal with credit card debt consolidation is to start with your existing credit card company. If you have good standing, ask the company what they can do for you to bring your bills down. Nine times out of 10, when a person is in good standing with a credit card company, they can ask for a lower APR and receive it. All it takes is a simple phone call, but most people have no idea this can happen.
Of course, once you go through credit card debt consolidation, you want to make sure you watch spending, keep balances down and always make your payments on time. That way, you would not end up in the same situation of being in over your head with credit card debt.