Credit Card Consolidation: Important Facts About Credit
Consolidation
Credit card consolidation has been catching on as a popular and
smart way for consumers to reduce their debt levels. The way
that credit card consolidation works is like this: you obtain a
new credit card with a nice size credit line and then transfer
many of your outstanding loan balances over to the new card.
Instead of paying 17.9%, 21.6%, or even 24% or more on credit
card balances, a new low interest rate credit card can allow you
to reduce your monthly payments and pay down your debt faster.
Please keep reading for examples on how you can take charge of
your debt.
Out with the old, in with the new
Much of the debt owed by consumers is through credit cards. If
you have 1, 2, 3, or more cards, you probably are paying high
interest rates on several of your outstanding balances. Your JC
Penney, Macys, even your regular Visa or MasterCard can be
charging you interest rates in excess of 20%! You can get out
from underneath these burdens by selecting a new card with a low
APR and transferring your balances over. In effect, you have
created a credit card consolidation with your new card. Just
don't use your old cards again as you might find yourself with
more debt than you can possibly manage!
Lower monthly payments, low APR
By transferring your high balances, you can save several hundred
dollars per year in interest payments. With some cards, you can
even get an introductory APR of 0% for the first twelve months.
After that your variable rate is likely to be lower than what
you paid for your store cards, bringing home big savings for
you. In addition, you will have more money to pay off your
existing balances faster. In effect, a credit card consolidation
can help you get out of debt quicker. Less debt, better credit
rating
By paying off your debt faster, your credit rating will improve.
An improved credit rating can have a positive effect on future
borrowing, especially if you are considering purchasing a new
car or a home. All of this good stuff happens because you made
the smart decision to go the credit card consolidation route to
attack your debt.
Is everyone eligible for a credit card consolidation card?
Unfortunately, that answer is no. If you have very bad credit
you likely will not be eligible. Still, unlike a debt
consolidation loan done through your bank's lending department,
there are no application fees to apply for a credit card. So, go
ahead and apply and you just may find yourself selected to carry
a little piece of plastic that can go a long way toward helping
you to achieve credit card consolidation.