Credit Card Consolidation

How to save money in interest and finance charges
There are a lot of people out there with significant credit card debt. With bills piling up and interest and finance charges more than your minimum payment every month, it can look like you will never get out of credit card debt. But there are answers out there.

Of course the simplest solution is to pay off your balances every month. This is a preventative measure, assuring that you’ll never get into credit card debt. But this is not possible for everybody. So, what else can you do? What if you are already in debt and can’t pay off what you owe any time soon? Credit card consolidation may be the solution for you. The following will discuss all your options in better detail.

balance transfers & Introductory APR Rates
Another answer would be to transfer your high interest credit card balances to another credit card with a lower interest rate. This is called a balance transfer and works well for some people.

But you should be careful of some cards that offer you an introductory annual percentage rate (APR). This means that the interest rate will be low for a limited time and rise after that initial period. If you go that route, make sure you can pay off the balance before the initial low interest period is over, or you’ll wind up in the same position you are in now.

Credit Card Consolidation Loan
Another solution is a credit card consolidation loan. A credit card consolidation loan can help you to consolidate the outstanding debts on your current (high-interest) credit cards to one with a lower interest rate and lower payment.

Here is how a credit card consolidation loan works:

Let’s say that you have an outstanding balance of $10,000 in credit card debt.
Now, let’s say that the annual percentage rate is 20%.
If the outstanding balance stays at $10,000, then you will pay $2,000 in interest charges.
Here is how that works out: $10,000 x .20 = $2,000
This doesn’t even include the finance charges that you are likely to incur during that period.

But let’s say that you take out a credit card consolidation loan.
You can convert those high-interest credit card payments into a single loan with a lower interest rate.
So, let’s once again say that you have $10,000 in outstanding credit card debt.
You take that and convert it into a credit card consolidation loan with a 9% interest rate.
Let’s see what that comes out to: $10,000 x .09 = $900
This is an annual savings of $1,100 in interest charges.
And if you put that savings towards to principal of your debt, you can pay it off even faster. This makes a credit card consolidation loan desirable for many people.

These are just some ways you can get rid of credit card debt. But credit card debt of any sort should be taken seriously. It is usually a sign on something more deep-rooted than just bad spending habits. It is usually a sign of a more serious problem and debt is just a manifestation of that problem. If you have significant credit card debt you may want to seek individual, professional financial counseling.

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Want to read more? Below are articles that should be of interest to you:

• Balance Transfers 101 - The concept of a balance transfer seems simple enough, but there are a number of steps involved that are critical to successfully moving money owed from a high interest credit card to one t...
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