Credit Card Consolidation

The fact that credit card debt is increasing tremendously across North American households is no surprise. After all, credit cards are practically given away to college and university students who are often unaware of the implications of high interest rates and minimum payment problems. It is easy to build up credit card debt-an emergency car repair, purchasing gifts for the holiday season, or thoughtless purchases made without reflection paid to their costs are all causes of credit card debt. And thus, the increase in the need for credit card consolidation.

Furthermore, statistics indicate that bankruptcies in the United States have increased nearly twofold in the last ten years, with credit card debt a significant contributor to overall debt. If you find yourself in such a position, with a household average of $10,000 worth of credit card debt, a solution you may want to consider is credit card consolidation.

Credit Card Consolidation Defined

In essence, credit card consolidation is another term for debt consolidation. Your monthly payments are combined so that you only make one payment each month. Ideally, the overall credit card consolidation payment made should be less than the total of all previous payments, and the interest you pay is reduced so that you can save money.

For example, take someone who has 4 credit cards with a minimum payment of $200 on each. Together, their monthly credit card payments are $800, without effectively reducing the principal. This person is a good candidate for credit card consolidation, consolidating their debts in order to make monthly payments that are less than their original monthly payments. While the loan payments are usually extended for a longer period of time, this is still a good option for those in serious debt. And if you have several credit cards and all of them have reached their limit, you might be a candidate for a credit card consolidation loan.

Benefits
It is common knowledge that credit card companies make money off of you when you make only the minimum payments required on each month's statements. This is a cycle that almost guarantees that you will never see your overall debt reduced in any significant way. Rather, your minimum payment goes toward paying the high interest charged and only reduces the principal narrowly. Unless you can avoid carrying any balance on your credit card, you might be better off consolidating your credit cards in order to avoid paying such high interest rates and seeing no immediate change in your debt load.

Unfortunately, most people aren't a position to pay off their monthly balance in full each month. One benefit, then, of credit card consolidation is that it allows you to rid yourself of credit card debt, dealing only with one payment each month…and no calls from creditors demanding payments.

To put this into numbers, take this as an example. Your credit card company might charge you 20% interest, while a debt consolidation loan might offer a rate of interest in the 10% range. Saving 10% each month in interest is significant for debt holders and can save you money immediately.

Your Role In Credit Card Consolidation
Credit card consolidation does not eliminate debt alone. You still require a plan of action for paying off your debt once you have decided to consolidate it. It is vital to change your lifestyle once you have consolidated your credit card debt. Rid yourself of credit cards, using one only in emergencies and planning to pay off the balances in full each month. If you do not have the self-control required to stop increasing your debt load, credit card consolidation will not help you.

Lastly, ensure you know that the consolidator you choose has your best interests in mind, and is not financed by credit card companies in the first place.

Please contact us here to find out more about our program, and how we can help you.

We take your privacy extremely seriously. Read our privacy policy here.