Credit Card Debt Consolidation, When Should You Do It?

By: Gibran Selman

Consolidating credit card debt is a wonderful option for individuals who need it. However, not everyone understands when they need to consolidate their credit card debt and when they don't. But, this article will explain all the necessary information so you will know all about consolidating credit card debt.

Interest Rates

The first thing you should do when considering consolidating your credit is to determine the interest rates on your credit cards. If you have a variety of interest rates then see if you can consolidate your debt onto the card with the lowest interest rate. This will allow you to save plenty of money on interest charges. However, if your credit cards all have the same interest rate, for example 15.9% then there is no point consolidating your credit onto one card because the interest is equal and you will pay the same interest charges whether on one card or multiple cards.

Balance Transfer Charges

Another thing you need to consider is balance transfer charges. Once upon a time transferring card debt to other cards was no problem and no charges were incurred. However, with the popularity of consolidating the card debt this way more and more credit cards are recognizing they need to take part of the action and are charging balance transfer fees. So, if you are considering a balance transfer then you need to evaluate what charges might be assessed and if the balance transfer is truly beneficial for you.

Your Financial Situation

Consolidating credit card debt can also free up some of your monthly budget and help make your live livable again. It will also help you avoid bankruptcy, lower your debt payments up to 50%, allow you to make one monthly payment, not to mention making a single monthly payment. But you need to evaluate your personal financial situation before you can determine if consolidating your card debt is really for you. Do you truly have problems making all of your payments because your income is stretched tight? Or, do you have enough money to make your payments but mismanage your money and then when the bills are due have nothing to pay? If the first situation sounds like you then credit card consolidation could be for you. However, if you are part of the second scenario then you need to work on money management and paying your bills first.

Are You Ready to Close Accounts?

Many times if you enter a debt consolidation program for credit cards you will be required to close your credit card accounts and enter credit counseling. You should evaluate if this is something you really need to do or whether you can control your spending and payments on your own. If you are really out of control and cannot afford your monthly payments then this is a good option. However, if you can afford your monthly payments simply pay them first and what is left over can be for other things.

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