Debt Management: Consolidate credit card debt

Sunday, May 26th, 2013 By

For many consumers, to consolidate credit card debt is the first step to debt management.Unfortunately, millions of people are currently in credit card debt. Several options for getting the situation resolved exist, and one way is to consolidate credit card debt. Before making the decision to do this, however, you should first understand what it all entails. To consolidate credit card debt means to take the amount owed on several cards and rolling it into one card. For this, balances could be transferred from the cards to a new card, or perhaps the process could be handled with a low-interest bank loan.

Pay attention to the APR!

If you need to consolidate credit card debt, the most important thing is to pay attention to the APR, or Annual Percentage Rate. While a number of factors should be considered for debt consolidation, without doubt the APR is the most critical. The goal is to choose a new credit card with a low APR or find a bank that would offer a low APR loan. Of course, to consolidate credit card debt, you need a lower APR than what you are currently paying.

Just remember that to consolidate credit card debt, as you go from one card or bank to another, the APR being advertised is short-term, especially with credit card companies. This type of scheme is made to entice people to make the switch, but in most cases, the low APR on the new card would only be for a period of 12 months or less. The problem is that after the introductory period, the APR shoots up higher than what you had been paying previously, which means you will be right back in the same situation.

You might need a new credit card company

For this reason, if you want to consolidate credit card debt, always pay close attention to all the details for any credit card company that offers 0 percent APR, specifically those that make the offer for a six to twelve month period. What you need is a new credit card company that will have a lower APR than what you are currently paying, after the introductory period. While you could consider the services to consolidate credit card debt with any card company, you might get the best offer from the card company you currently have your cards through, although you may want to check first.

Often, choosing to consolidate credit card debt is a wise decision, but you need to know exactly what you are getting into by understanding the APR and introductory period. Once you transfer card balances over or take out a low-interest loan with a bank, obviously you want to be careful with your spending and make on-time payments to avoid being in this situation again.

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