Do you have a few cards that you are constantly paying super high interest rates on? Do you have a few credit cards that you can only pay the minimum amount each month? If you answered yes to either of these questions, using credit cards for debt consolidation may be helpful for you.
What is credit card debt consolidation? Simple, credit card debt consolidation is when you use one credit card with a large limit to pay off your other credit cards with either higher interest rates or high fees. This strategy is not for everyone; however for some people it can be very helpful.
Two things to keep in mind, the credit card that you do the consolidating with must be a lower interest rate and have lower fees than the other cards, or else, you are not fixing the problem. If you have three store cards that you owe $500 each for a total of $1500 and you are paying an average of 21% interest rate per year, you can consolidate all three credit cards with a new card having a limit of $1500 and only a 9% interest rate per year. You can see how you can easily save a few hundred dollars per year just by consolidating.
The only way the consolidation will truly work, is if use this tool to get rid of your debt and not a way to rationalize to yourself to spend more money because you have zero balances on your other cards. Before you consolidate your credit cards, make sure you can transfer balances to your new card and makes sure these balance transfers do not cost any money or result in higher interest rate fees, or else it might not be worth it. However for an effective strategy to limit your credit card debt, look into consolidating your credit cards.
Connie Barker is the owner of several financial websites including those dealing with Credit Card Debt Consolidation |
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