The Skinny on Debt Consolidation and Credit Cards

A Credit Article Contributed by Mark Mcclelland

Do You Have a Pile of Credit Cards and You're Considering a Bit of Debt Consolidation

You're in credit card debt up to you eyeballs and you think that a bit of debt consolidation is just the ticket, right? Actually, the real answer - the one that's best for you - is a bit trickier to come up with than you might think at first.

To begin, it helps to remember that you're going to have to pay off your debt, every last penny of it, regardless of the path chosen.... and that it's going to take some time, maybe lots of it, to do it. Second, it's also important to understand that there are really only two general methods available for credit card debt consolidation: getting a debt consolidation loan, and transferring your current credit card balances to another card.

As it turns out, there're only a few circumstances where a debt consolidation loan will be of benefit to you, regardless of all the marketing hype put forth by the purveyors of such an option. Primarily, if you have a lot of debt, and you also have a decent, stable job that let's you live within you means, a debt consolidation loan might be an acceptable approach for you. If this doesn't describe your current situation, a debt consolidation loan might not be the best approach to more rapidly reducing your overall credit card debt.

The other basic alternative is to find a card with available credit sufficient to cover the balances of your other cards. You might already have one, or you might be able to apply for one. A caution here, make sure that the card you're using for consolidation purposes has a reasonable interest rate.... it won't do you any good to consolidate all of your debt onto the card with the highest interest rate.

A point that's rarely addressed, however, once you've finalized you consolidation plan, is what you should do with all those credit cards that now have available credit.

You might think that it's a good idea to to keep them, but it might also be a good idea to cut them up and close those accounts. So, here's a couple of (very) short lists concerning why you might want to keep, or not keep, at least some of those cards after ytou've consolidated your consolidated.

The Upside to Keeping Your Credit Cards after Debt Consolidation

* You now have something to stash away - keep in reserve - for emergencies

* When you finally get all that debt payed off you won't have to re-apply for cards because you'll already have some with good credit limits

The down Side to Keeping Your Credit Cards after Debt Consolidation

* Now that you credit card have $0 balances you're free to resume any bad spending habits you've developed over the years

* Too many credits on your credit reports might send the wrong signal to lending institutions.

In the final analysis, your decision on whether or not to keep any of your $0 balance credit cards after consolidation should be made after you take a good hard look at yourself. Determine what you got into so much debt that you need to go through debt consolidation to begin with; what're your spending habits? how susceptible are you to the temptation of impulse buying?

If you know you can control your spending, keep one or two of the cards (of course, those with the lowest interest rates), otherwise cut them all up and get one debit card for those times when cash or checks aren't viable payment options.