Using Credit Card Consolidation
For many people, credit cards are their only debt. And what debt! Most cards levy hefty interest charges, making it very likely that you will spend decades paying of the credit cards if you only pay the minimum each month. However, credit card consolidation can help reduce the amount you pay in interest and affect you pay over the life of your credit cards. For those who are tired of paying high interest, despite their best efforts to pay on time and stay under the limit, credit card consolidation can help. Like other debt consolidation loans, credit card consolidation works the same way. You can get an unsecured loan from a company that specializes in debt consolidation, or you can go to a bank or credit union to consolidate your credit card balances. Additionally, it is possible to accomplish credit card consolidation with a secured loan in the form of a car title loan or a home equity loan. If you have many high credit card balances, you might need a secured loan to cover the entire amount that you owe. It is amazing how fast credit card debt adds up. There is another interesting credit card consolidation strategy. It is using credit cards themselves. This type of consolidation, however, requires discipline. And you should probably only attempt it if you have less than four thousand dollars in credit card debt. This is because it requires getting a new credit card to cover the entire amount of your other cards. Much of the time, credit cards with the lowest limits charge the highest interest rates. That small $500 credit line may be charging 22% interest. Or you might have a $1,500 limit with a 15.9% interest rate. You might have both. At any rate, if you have a job and make your payments on time, chances are that you are receiving special offers for credit cards in the mail on an almost daily basis. If you look at the offers sent by companies, you will find that many offer 0% interest for six months to a year and a half. Collect the offers for a week or so, and then compare them. Look for length of introductory rate, as well as the rate itself. Also look at the rate when the introductory period is over. Choose the best card and apply. Use the balance transfer option to initiate your credit card consolidation. When you are approved for the card, the new company will automatically pay off your other credit card balances. Now you have one credit card, and one balance, and no interest for a certain period of time. This type of credit card consolidation only truly works if you are disciplined. You should cancel your other cards, except maybe one that can be used in emergencies. And you should control your spending habits. It does not good to consolidate your debt on to one credit card when you max out the two or three cards you just freed up. Then you end up in more, not less, debt. This is why it is important to cancel the credit cards that you no longer need.
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