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Credit Card Consolidation

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Credit card consolidation is very similar to a debt consolidation loan. Debt consolidation loans are designed to provide funds to pay off multiple debts. They are an efficient debt management tool that aims to take away the debt burden from the borrower’s shoulders. A debt consolidation loan is the replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. Debt consolidation loans may be a perfect solution for people who are finding it difficult to meet their current monthly repayments. Instead of paying multiple creditors various amounts of money/interest rates each month, you only pay one creditor and hence only have one monthly payment. Many people find this option of taking out one loan to pay off all their credit card balances favourable however there is another option available.

Credit Card Consolidation

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When it comes to credit card consolidation you have the choice of taking out a loan to consolidate all your credit cards, alternatively you can apply for another credit card and transfer all of your current credit card balances to you new card. Many credit cards offer special rates for new customers, such as 0% APR for the first few months, or a lower interest rate for a period of time. Many providers offer interest-free introductory periods as a way to entice new customers to transfer a balance. Some offer a 0% interest rate for up to 12 months. Hence if you were to transfer your existing balances to this new card you could save yourself a lot of money in interest payments.

There are many advantages to credit card consolidation which include:

· Lower interest rates.
· Easily manageable lower monthly payments.
· You will only have to deal with one creditor.
· Stop the late fees and over limit charges you may currently be faced with.
· Put an end to the harassing phone calls from all the creditors you owe, no more phone calls reminding you of your overdue payments.

Bear in mind that the only way to actually reduce your credit card balance is to make more than the minimum monthly repayments. Paying the minimum amount each month is not really enough - you will mostly be paying the interest. Even if you have a 0% introductory rate, you will still barely make a dent in your debt.
The minimum monthly repayment amount can be as low as 2% of your balance. Your interest can sometimes be more than your repayment. That means that if you just make the minimum repayments, you will never pay off your debt. Transferring your balance from one card to another may save you some money when it comes to interest payments but it doesn’t really help you pay off your debts, however if you take advantage of a 0% credit card balance transfer then it does provide you with a short amount of time to pay as much of your balance as possible knowing that your money is going towards paying off the debt itself, and not just interest.