Of all the types of debt to be in, credit card debt is widely considered to be one of the worst. These companies charge very high interest rates which quickly make it nearly impossible for you to catch up on missed payments. However, the idea of paying for something with money you don’t presently have is a slippery slope and is a mistake that consumers frequently make. Consolidating your credit card debt is an option that you have if you are finding it impossible to pay off all of your outstanding balances, but you need to get all the information before you jump head first into this.
Why would you want to “consolidate credit card debt”?
There are two aspects of credit card debt. There is the large principle, which is what got you in trouble in the first place, and then there are the double digit interest rates that were mentioned earlier. These interest rates increase the principle at what feels like an astronomical pace. Credit Card consolidation can help you bring down this interest rate, which will give you a sense of breathing room that you likely didn’t have before. Depending on the size of the principle in question, even reducing the interest rate by a few percentage point can make a big difference in the long run.
How to consolidate your credit card debt
You need to understand that each person’s situation is uniquely different and finding a credit card consolidation plan that works best for your situation is important. There are lots of options out there that appear to work well but usually do not deliver in the long term. Examples of these options are consolidation loans, low or zero interest credit card balance transfers or maybe even getting additional credit cards.
The reason why these options don’t always work for everyone comes down to the individual choices. For example, a debt consolidation loan is a loan, and must be paid back. If you are already struggling to pay off your current debt, and you get a loan but default on it, you will be in a worse position than you were before. These loans give you the impression that you have less debt than you do, and many people go out and get more debt on top of this! This becomes a slippery slope. Additionally, with zero or low interest rate offers, it may work for a few months but eventually the rate will be replaced by a much higher rate, and you will be right back to where you started. As you can see, these options only bring on more debt instead of solving your current debt.
Most likely, you will need to consult a debt consolidation and relief organization to help negotiate on your behalf. Some people are able to negotiate with their creditors themselves, but often it is best to leave this to the experts.
Consolidating your credit cards is a good way to get you back on track to paying off your reasonable monthly payments and will also help you start to feel normal about your finances again.