Are you getting frustrated trying to pay off several credit cards?
To be frank with you, credit card debt isn’t fun at all and, in fact, the more of it you have the more frustration you feel. If this is you, credit card debt consolidation is the silver lining you’ve been looking for.
But before I move on, let me explain what credit card debt consolidation means.
What Is Credit Card Debt Consolidation?
Credit card debt consolidationis a debt refinancing process that allows you to combine all of your debts into a single loan/debt and pay them off with a single monthly payment. To consolidate a debt, you need the service of a debt consolidation company or take out a consolidation loan.
The benefit in consolidating debt is that it helps reduce your payment significantly compared to the total amount you’re paying previously.
However, there’s one important thing you need to know about credit card debt consolidation: It’s not right for everybody.
And that leads us to…
Who’s Credit Card Debt Consolidation Right For?
To know whether you should consolidate your credit card debt or not, the first thing you need to consider is your respective circumstances and the terms of the consolidation.
Here are the key factors to consider when deciding whether it’s right for you or not to consolidate your credit card debt:
- Are you in a strong financial position to pay off your credit card debts? Because without a stable or regular income, even after consolidating your credit cards you’ll still not be able to pay the monthly payment.
- Will you get lower interest rates by consolidating your credit card debt? Of course, that’s one benefit you’re supposed to get with debt consolidation and if you can’t get it, then it’s not worth it.
- Is the duration for the loan repayment longer or shorter? Consider this carefully before taking the plunge into credit card debt consolidation.
Now that you’ve understood what credit card debt consolidation is and you’re ready to consolidate your credit card debt, what tips do you need to get the most out of your consolidation:
4 Best Tips for Consolidating Credit Card Debt:
Tip #1: Read and Understand the Terms of Service.
Although this tip applies to everyone whether you’re using a debt consolidation company or not, it specifically applies to you if you’re considering consolidating yourself by transferring higher interest balances to a single card or more with lower interest rates.
And if that is you, here are things you need to consider before consolidating your credit card debt yourself:
- Are there any fees for transferring your credit card balance?
- How long will the lower interest rate last?
- What amount of the transferred credit card balance will fall under the lower interest rate?
All of these factors will impact substantially on how much you’re going to pay and you should consider them carefully. Because your goal is to pay less and not more as you’re consolidating your debt.
Tip #2: Examine The Credit Consolidation Company or Credit Counseling Agency.
If you’re just starting out to consolidate your credit card debt, or you’re trying out a new credit consolidation company or credit counseling agency for the first time, you’re going to be facing a lot of difficulties wading through the market for the best pick.
In that case, you don’t have to believe everything you heard about any debt consolidation company but you have to check it out to make sure they’ll offer you the quality of service they claim they do.
The truth is some companies are only there to fleece you and make your situation worse. They spend heavily advertising on television, radio and the internet, but you need not be deceived by that. Before you jump into a business with them, first search online for unbiased reviews and check with the Better Business Bureau to see if they’re worth your time and investment and if there are any consumer complaints.
Tip #3: Don’t Use Your Credit Card Once Consolidated
This may sound funny to you but it bears emphasizing that you shouldn’t use your credit card (s) after you’ve consolidated them. The simple reason here is that since you’re reducing your expenses you may want to believe you have more money to spend. But that isn’t true. You need to focus now on anything that will help you pay off your consolidated card, not adding to it.
So you’re wondering what you should do if after consolidating your credit card you find yourself in a true emergency situation. In that case (and only in that situation), you can charge such an emergency expense to the card carrying the balance you owe. But remember you’re to not start charging on your cards with a zero balance in them as it could lead to trouble.
Tip #4: Read and Understand the Terms of the Agreement.
I can’t emphasize enough how important it is that you read and understand the terms of agreement of any company you’re using. Whether you’re doing the debt consolidation yourself or not, you must understand what’s in that paper before signing it. Because in a legal matter, a written contract carries more weight than a verbal one. And, once you append your signature to it, it becomes binding on you.
Additionally, reading and understanding the terms of the agreement helps in making an informed decision. It will help you calculate how much you’ve to pay and you’ll be able to choose the best credit card consolidation for yourself.
So there you have it. From what credit card debt consolidation means and when to consolidate your debt, you have all there’s to make the most out of your credit card debt consolidation. By following all the tips above, you’ll be off to a good start to relieve yourself of your financial woes.
Thanks for reading!!!