An Informative Guide to Credit Card Consolidation

But, what exactly is credit card debt consolidation, is anyone eligible, and is it really a viable solution for eliminating credit card debt, or does it simply exacerbate an existing problem?

Considering that one out of every seven Americans has an astounding 10 or more different accounts and the average person carries four, we're certainly not adverse to credit card use, we just need to learn how to make the process work for us rather than against. Luckily for us consumers, the credit card business is a highly competitive one, especially in today's economy, giving us plenty of options and incentives to choose between, provided, of course, that you have a history of paying your bills on time.

Is Credit Card Consolidation Right for You?

A balance transfer of multiple credit cards to one interest-free credit card has the potential to save a considerable amount of money during the initial period when no interest charges will be accrued. But, you should note that opening new accounts on a periodic basis could adversely affect your overall credit rating, making it more difficult to obtain loans or complete other financial transactions in the future.

Shop wisely when it comes to finding the one card with the best terms for you and your current financial situation.

In order to make a notable dent in your balance, it's imperative to pay more than the minimum monthly payment, even more so after the zero percent or low interest rate period is over. Credit card companies will be more than happy to accept the minimum amount due each month as only a mere fraction of your payment will be going toward the principal, potentially leaving you in debt for many years to come, just the opposite of what you were trying to accomplish by consolidating.

To successful consolidate credit card debts using credit cards, it's imperative to pay as much as you can each and every month, never missing a payment as the late fees will quickly add up, not to mention the damage done to your credit score. And, if you're getting near your account's credit limit, unexpected fees have the potential to send you over that limit causing yet even more fees to accrue.

When consolidating debt with a credit card, you'll also want to promptly put the new card away and not use it for anything until after you've paid off all of the old debt. New purchases won't have that special, low interest rate and all future payments you make will then go toward paying them off rather than what the card was actually intended for.

Also, be aware that credit card issuers have the prerogative to change their interest rates at any time, provided you're given at least 15 days notice, that is, so pay attention to your card's rates and call customer service with any questions or concerns.

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