Credit Card Consolidation - Get Your Credit Card Debt Back Under Control

Credit card abuse is one of the main reasons why many people suffer with credit problems and increasing debt

. Credit cards, quite simply, are far too easy to abuse and a mountain of debt can be realized all too quickly when there is no restraint shown; high interest rates and the fees associated with them only compound the problem. This is why understanding credit consolidation and the processes involved is very important.

The two main options open to someone seeking consolidation are balance transferring and using a consolidation loan. Balance transferring involves transferring all your high interest card balances to a single low interest card or a card that offers a zero interest offer. A credit card consolidation loan pays off your balances and in return offers a much easier to manage debt at a much lower interest rate.

It may seem obvious but when searching for a card to transfer all your balances to you need to look for the card that offers the lowest interest rate, charges and balance transfer fees. If you do not do your homework correctly you could end up creating an even worse financial situation than the one you are trying to get away from.

There are literally hundreds, if not thousands, of card providers and you should not rush the process of searching out the best possible deal available, never settle for the first deal that you find even if it seems like an unbeatable offer.

Many card providers offer zero interest balance transfers that are great in the short term but you should take note of the interest rate that they will revert to after the introductory offer has ended as this could be crippling. Another thing to look for when considering zero interest deals for consolidation purposes is whether or not the zero interest offer applies to any new purchases or just the balance that is transferred.

Cards that offer free balance transfers are something to look out for as well. There are quite a few providers that offer no fees when transferring balances but as always you must be on guard against hidden charges.

The long and short of it is if you are considering using the balance transfer method of consolidating your debt always do the math, there are great deals to be had out there but if you choose poorly by either jumping in before making those all important calculations you could end up in trouble.

The alternative to balance transfers is that of a credit card consolidation loan, a far safer option. All of your credit cards will be paid off and replaced with a single, easy to manage loan at a much lower interest rate.

Unlike previously, your monthly payments will be amortized; this means that your outstanding debt (principal) will be paid off as well as the interest each time you make a payment so you can physically see your debt reducing. In comparison, a monthly card payment will only make a nominal payment towards reducing your balance and will almost completely go towards paying off interest, this is soul destroying to say the least as your balance never comes down!

One of the main stumbling blocks with consolidation loans is that they are increasingly difficult to get, especially if you have a history of credit problems. If you are able to get these loans it is wise, as with the balance transfer method, to shop around for the best available deal.

Homeowners who have equity in their property have the added option of applying for a secured loan for the purpose of consolidating credit which can be a much quicker and cheaper route.

Whichever consolidation method you decide upon you will inevitably face fees and charges for refinancing so never jump into any deal blind, do the math, make the right choice and get your finances back on track.

Do nothing and your debt will only worsen!

by: Daniel Major

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