Credit card debt is a nightmare problem that unfortunately many people are facing today (and others can get into credit card debt if they are not paying attention). Credit card debt consolidation is often considered to be the most important step in reducing and eliminating credit card debt.
So what is “credit card debt consolidation”?
Credit card debt consolidation is the process/strategy of consolidating debt from multiple credit cards into a smaller number of credit cards (preferably one or two credit cards). Credit card debt consolidation is sometimes referred to as a balance transfer, where you transfer the balance from one credit card to another. Generally, a balance transfer (or credit card debt consolidation) is a transfer from a credit card with a higher APR to a credit card with a lower APR. Credit card debt consolidation can also be accomplished by applying for a bank loan (with a lower interest rate) and using it to pay off the debt on the credit card with the higher APR. This loan is then repaid to the bank in the form of monthly installments.
As you may have noticed, many credit card providers and banks are constantly offering attractive credit card debt consolidation (or balance transfer) offers. There is no shortage of 0% APR credit card debt consolidation offers. However, credit card debt consolidation is a serious endeavor and you must proceed with caution to avoid getting into deeper trouble. When doing credit card debt consolidation, you must properly analyze the offers from various banks and credit card providers. Check the time period in which the 0% APR is offered and the APR that applies after that time period. Generally, 0% APRs are only valid for 6-12 months. Therefore, if you are confident that you will be able to pay off a fair amount of debt within that time period, this credit card debt consolidation will work for you even if the APR (after the 0% period) is slightly higher. However, if this is not the case, the long term APR will be the most important thing for you. If the long term APR is higher than the APR on your current credit card, this credit card debt consolidation will be futile for you. Also, check for processing fees, etc. before you actually do a balance transfer or credit card debt consolidation with another provider/bank. Another good idea is to check with your current credit card provider to see if they can offer a lower APR to help you pay off your debt (you will be surprised to find that they do sometimes oblige, thus eliminating the need for credit card debt consolidation).
It is important that you develop good spending habits while you are doing credit card debt consolidation; otherwise, credit card debt consolidation will really be useless to you.