Credit card debt consolidation can be used to eliminate your consumer debts. This is especially useful if you have balances on multiple credit cards and are having trouble making your monthly payments.
Credit card debt consolidation involves paying off a number of different shorter-term or higher-interest debts with 1 longer-term and lower-interest loan.
You will simplify your credit card bills by combining them into one bill that you have to pay each month. Additionally, you will reduce the amount that you will have to pay each month.
You will have to pay more overall debt in return for being able to pay less each month, since it’s essentially a loan you’re taking out to pay all of your credit card bills with just one payment per month.
Since the consolidation loan usually has a higher interest rate than the rates on each of your cards, you’ll spend more money in the long run to clear up your debt than you would paying down the card with the highest annual percentage rate (APR).
Therefore, you should calculate the amount of money you’ll pay based on each card’s APR as compared to the amount you’ll spend on the consolidation loan. If you still decide to consolidate your credit card debt, shop around for the lowest rate you can get to reduce your costs.
To avoid finding yourself in this precarious situation again, you need to learn to control your spending habits when it comes to using your credit cards. Charging large purchases on your cards will only put you back into debt, which will affect your FICO credit score. You’ll also be put back into a position of needing a consolidated loan again, which will negate the efforts you took to get yourself out of debt before.
Therefore, to truly keep yourself from dealing with constant credit card debt, only use your credit card for inexpensive purchases where you don’t have the money on hand, not for large-ticket purchases that you can’t afford.
Knowing when and how to obtain credit card consolidation can be a tricky proposition. A lawyer who is experienced at debt reduction can aid you in knowing when and how to gain a credit card consolidation that will enable you to pay off your debts as quickly as possible and with as little long-term damage to your credit as possible.