Why Consolidate Credit Card Debt

Multiple credit card debts are a recipe for financial disaster, which are likely to result in penalty interest rates and late payment charges unless card repayments are properly organized. Anyone struggling with debt repayments will benefit from simplifying the process of repayment, both in financial terms and by suffering less stress.

The most compelling reason to consolidate credit card debt is to convert multiple debts into one simple monthly payment with a clear interest rate, instead of juggling disparate rates. Having just one payment to deal with eliminates the risk of multiple late payment charges which are more likely to be incurred if the consumer is juggling debt. Through consolidation the consumer can probably pay the debt at a lower interest rate, unless credit reputations have already plummeted due to mishandling debt.

Consumers who consider consolidating debts should always remember that credit card debt is unsecured. Whilst various methods of consolidation may appear as viable it is important to understand that converting unsecured debt into secured debt via a loan is a foolhardy move.

Loans should be avoided, particularly secured ones which leave ones collateral open to grabs, in favor of balance transfer cards as the preferred method of consolidation. The worst thing to do is to pay a debt company to consolidate the debt: it is a simple matter to deal with oneself without paying additional costs to have a third party arrange it.

Zero interest or low interest balance transfer cards are the optimum way to aggressively clear down debt. A fee of approximately 4% is levied to transfer the debt, thus representing an interest rate of 4% on a zero rate card. Those who fail to qualify for the lowest interest rate balance transfer cards will find it is worth approaching a current credit card provider to negotiate a reduced interest rate on the existing card and transfer other credit debts onto it.

Once all ones debt has been consolidated onto either a new balance transfer card or an existing credit card, all credit card spending should cease. The opportunity is there to repay the combined debts quickly, particularly if an introductory offer period is limited. The aim should be to clear down all, or as much of the debt as possible, before the introductory rate expires. If the period is not long enough to clear the debt in full then a further balance transfer should be considered in good time before the expiration of the introductory period.

It is crucial to understand that any late payment may result in the imposition of a high penalty interest rate which will negate totally the benefit of consolidating the debt, and could effectively end up costing more. To avoid such a scenario a monthly payment should be arranged by automated debit to ensure the credit card is always paid on time.

The ease of meeting one simple monthly credit card payment can reduce the stress of attempting to juggle multiple credit card debts. By lowering the interest rate across the debts the total amount to be repaid is reduced, with less likelihood of falling foul to late charges and penalty interest rates. Consolidating debt onto one credit card is the simplest and most effective way to make inroads into clearing down unsecured debt.