Is Debt Reduction Better Than Credit Card Debt Consolidation?

Quite simply, the use of credit cards to consolidate your credit card debt is not as effective as debt reduction

. There are many credit card companies that offer low interest balance transfer deals designed to entice an individual to transfer their high interest credit card debt:

However, once these offer periods are over the interest rate reverts to a much higher rate that often leads you into deeper trouble. It's common knowledge that credit cards are the main reason for forcing debtors to begin looking for consolidation solutions that will reduce their burden.

Debt reduction, by definition, is the process of the reduction of the amount of debt and therefore monthly bills and not to add to, or maintain the level of debt by using another source to pay it off. Therefore, you should not even consider the use of credit cards to consolidate and instead you must find an alternative.

If you have a mortgage, auto loan, personal loans and high credit card balances and they add up to $1400 in repayments each and every month and you need to reduce your outgoings dramatically you may well ask if this is possible. In a word, yes; but are there lenders that will offer a loan in order to combine all of this into one lower, more manageable payment?

Again the answer is yes. There are loans currently available that offer cash back, underpayment, and overpayment plans; secured and unsecured, although the latter is definitely a lot more difficult to obtain nowadays...

Loans secured or otherwise, will offer a vastly reduced interest rate compared to consolidation using the balance transfer method meaning that your monthly bill would be greatly reduced.

Furthermore, if your loan offers a cash back offer, you can then use this money to payoff some of your high interest balances.

Finally, a word of warning to all who are wishing to use consolidation. Consolidating will clear your credit card balances but - if you see this as a green light to revert back to the same spending practices that got you into financial difficulties in the first place you will be sorely mistaken.

Going back to your old habits will create a financial situation much worse than the one that you consolidated out of and this time there will be no consolidation available to bail you out.

by: Daniel Major

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