What Good Does Credit Card Consolidation Do Anyway?
A Credit Article Contributed by Mark Mcclelland
Why Would You Even Consider Credit Card Consolidation to Begin With?
If you're considering credit card consolidation, probably the first thing that pops to mind is the question 'aren't more credit cards better that fewer credit cards? '
The fact of the matter is that the more credit cards you have, and the more credit that the card issuers extend, and the more of that credit you've used, the less likely it is that, when the time comes that you want to buy that new wall-sized Plasma TV, you'll be able to. Why, well, because that credit card issuers like to cover their bases, and denying you that increase in credit is one way to do it.
They know all too well, that the more credit cards your have, the more likely it is that you're already in debt up to your eyeballs, and the less likely it is that you'll be able to continue making your minimum monthly payments as time goes on, meaning that the more likely it is that you'll end up missing payments and defaulting on your debt.... Something they don't want.
And you do know, don't you, that if even if you CAN make your minimum monthly payments it'll take years and years to pay off those debts, even if you stopped using your cards altogether?
Even more of a reason to help yourself to a big helping of credit card consolidation, especially if you can consolidate onto a card with a lower interest rate.
Does Credit Card Consolidation Really Have to Be So Difficult?
While credit card consolidation may seen like a difficult task, what with balances on all your existing cards and such, the process need not be all that difficult.
What you need to do is develop a plan and it might work like this.
1) Make minimum payments on all you cards save your lowest interest rate card; the idea being that you want tot free up some credit on the lowest interest rate card.
2) When some credit becomes available transfer what balance you can from your highest interest rate card to your lowest rate card,
3) Continue cycling trough steps 1 and 2 until the entire balance of your highest interest card is clear.
4) Cut up your highest interest rate card and close the account, unless this is your last card, in which case you've completed your credit card consolidation process.
5) Otherwise, go back to step 1
This way, you'll end up with only a single low interest rate card.
But you can be sure that long before you've completed the consolidation process you'll be receiving scads of offers for new "low introductory rate" cards. Ignore them, UNLESS the post-introductory rate (meaning the REAL APR) is lower than that of your current lowest rate card. If that's the case, you might consider transferring whatever balance you can from your highest rate card to this new one and then closing the account on your highest rate card. That way you don't increase the number of cards available for your use.
What Else, Besides Credit Card Consolidation, Do You Have to Do?
After you complete the consolidation process, what else do you have to look out for? Well, primarily it's all those bad spending habits that led you to have too many credit cards to begin with. All others things that you'll need to watch out for are pretty much related to this one. It's our bad habits that keep us from moving forward more than anything else. Learn to shred those come-ons for new credit cards without even opening them.
Learn to turn a deaf ear to all those commercials that say you can't live without this latest new gizmo (you have up until then didn't you), and so on... you get the idea.
