Posts Tagged ‘credit consolidation’

What is Credit Consolidation

The credit card consolidation process involves combining all of your debts to various credit card companies into one monthly payment. Credit card consolidation is a viable option for people who cannot keep up with paying off credit card debts due to high interest rates. The process, which can be done independently or through a debt consolidation service, is advantageous for people who wish to improve their money management skills.

Benefits of Credit Card Consolidation

The primary benefit of consolidating your credit card debt is that you can greatly reduce the amount of interest that accrues upon your bills each month. This puts you in a stronger position to pay your monthly debt on time, as you will only have to budget around a single payment that remains at a consistent rate. The consolidation process also minimizes the likelihood that you will need to pay additional fees due to lateness or exceeding your credit limit. Additionally, when you make the effort to work with creditors in order to pay what you owe, they are far less likely to aggressively seek payment through telephone calls, emails or letters.

Consolidating Your Own Credit Cards

If you decide to consolidate all of your credit card debt on your own, the first step that you need to take is to choose the card that has the lowest interest rate, then transfer the balances of your other cards onto that single card. You may wish to open a new low-interest card that is specifically designed for debt consolidation before transferring your higher-interest balances. Remember to read the terms of this new card carefully to ensure that the interest rate will not greatly increase after a certain period of time. Another tip to keep in mind is to close your high-interest cards gradually rather than simultaneously; this will help to protect your credit score.

Using a Credit Card Consolidation Company

Many people seek the assistance of a professional credit card consolidation company. These companies offer services such as negotiating with your creditors in order to find the best repayment program available. Some of these debt consolidation companies are more reputable than others, so before deciding on which one to contact, check to make sure that the company holds the proper accreditation, has positive customer reviews and is in good standing as a professional business.

Tips for Debt Consolidation Success

After consolidating your credit card debt, you will want to get into the habit of practicing good money saving strategies. You can accomplish this by attending a class on budgeting or using financial planning software to keep track of your monthly expenses. Credit card consolidation companies will also advise you to cease using your cards while you are working toward paying off your debts. If you can stick to a firm budget while undergoing the consolidation process, with some room allowed for emergencies, you can continue to spend money sensibly once your creditors are paid in full.

Once you have made the decision to consolidate your credit cards, you will be on the right track to paying off your debt in a feasible and efficient manner. No matter where you reside, a credit card consolidation company can offer you a national debt relief plan that is suited to your financial circumstances.