Consolidating Your Credit Card Debt

Are you struggling to make your monthly minimums while you become increasingly buried in debt? You're not alone. Credit card debt is an epidemic effecting millions of Americans. The good news is that by learning how to consolidate your credit card debt you can begin to regain control of your financial situation quickly.

One way to consolidate your credit card debt is by using one low interest card to pay off several high interest cards. Once you've found a low interest card to use you may be able to pay off your other cards completely in just a few minutes over the phone.

There are many advantages to consolidating your cards by transferring balances this way:

  • Fewer bills mean fewer late fees and fewer headaches. When you're struggling to manage multiple credit cards you're more likely to miss a payment
  • Lower interest rates will slow or even stop the growth of your debt
  • Lower monthly minimums can put you in a position to exceed the minimums and start paying down the principle on the card

How do I choose a low interest card?

Many card credit card companies offer special introductory rates when you sign up for a new card such as, "0% APR on balance transfers for the first 12 months". You can find these offers online or in the mail. These offers may also apply to cards you already have in your wallet. Be sure to call each of your existing credit cards and find out if they offer special balance transfer rates.

It's important that you're aware of any pitfalls before making a balance transfer. Here are some important questions to ask first:

Are there any transfer fees?

Most cards will include a one-time transfer fee like 3% of the amount being transferred or a flat fee of $75.

What is the APR after the initial offer expires?

You can expect the APR will increase once the initial offer period expires so be sure to know what the new rate will be. If it's high like 25% you may wind up paying more than you had been before you consolidated your debt.

What happens if I miss a payment?

Many balance transfer offers are void if you are late and/or miss a payment (even by one day!). The rate generally jumps to the rate offered when the initial period expires.

Is there a universal default clause?

This is a clause that allows the credit card company to change the terms of your agreement including the initial balance transfer APR if you are late or miss a payment with another lender. So be aware even if you're on time with this card but late on another they can raise the APR on your balance transfer.

Consolidating your credit cards alone is not the answer to your problems but if you can muster the self-discipline to start paying down your balance it can be the first step toward regaining your financial health.

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