Credit card debt will quickly sneak up on you and can become a dangerous financial burden that may ruin your credit if you don’t manage it correctly. Paying down this debt is a challenge for most people, especially if they are still using their cards and adding to the problem. There are a few proven and techniques for credit card debt consolidation that will allow you to eventually payoff what you owe and manage your cards more responsibly.
Most people get into trouble with credit cards slowly as they gradually increase the amount of money they owe on them. As their balance on the cards grows, so do their monthly payments. It only takes one late payment to start things spiraling out of control, making your financial situation unmanageable. Before this happens you should consolidate your credit card debt and start to pay down your balances.
There are really three main ways of consolidating your credit debt and the solution you choose depends on your financial situation, the amount you owe on the cards and your credit score. In every case you will need to stop using your cards as you pay down their balances and then only use them after that for items you can pay off quickly. This way you can be sure to never get back into this situation again and can more responsibly manage your credit.
The simplest way of consolidating your credit card debt is to secure a loan for the total amount you owe on the cards and pay off their balances. This type of loan will usually be offered at far lower interest than what you are currently paying on your cards, which will allow you to pay down the balance much more quickly. Since you’ll be able to send more than the minimum payment required, any excess will be applied to the balance. Even if you can’t secure a loan for the total amount you owe, finding a loan to cover your highest interest rate cards is still a great idea to help you pay off some of your bigger cards. By eliminating these specific cards you will not only have more money in your budget each month, you’ll also be helping to improve your credit score. This will eventually allow you to have the interest rate on the cards you still use lowered as your credit improves, making them easier to manage.
Do You Need To Consolidate Your Credit Cards?
Another way to consolidate your credit card debt is by moving the balances around between the cards you have to allow you to eliminate some of them. This technique involves moving any balance from your highest card to your lowest and then closing out the higher interest card. If you do this for all of your cards you can normally lower your total monthly payments significantly because of the lower interest you’ll now be paying on the same overall balance. This is a great way to pay down this debt more quickly since you’ll now have more money to send against the minimum payment due on these cards to help lower the balance. You want to try and spread this debt out across a few cards to avoid coming close to your credit limit. Having a card that is close to its credit limit may lower your overall credit score and could actually trigger a raise in rates on all of your cards. If some of your lower interest rates cards don’t have room to move new debt to them you can always find a new card that provides a lower introductory rate and move the balance there. If you do this, you’ll need to close out the older card to remove the temptation of using it again. You may also be able to call the lower interest rate card’s customer service line and have your spending limit increased so that you can move a balance over to it. If you have been a customer for a while and been current on your payments, they may be happy to do this for you.
The last option for credit card debt consolidation is a little more dramatic and should only be used if you find yourself in serious trouble with your credit card debt. There are companies that provide credit card debt settlement programs and can work with your lenders to create a plan to pay off your balances. This usually involves them negotiating a lower interest rate and possibly a lower balance on the cards you now have and may also require closing a few of them. This will allow you to get current on your payments and help you eliminate this debt over time. The risk is that some of the credit card companies view this type of approach the same as defaulting on the card and may report you as delinquent to the credit agencies. Be sure if you choose this option that the company you use to negotiate your debt does all it can to not let this happen. Even if you are reported as delinquent, a short-term dip in your credit score may be worth it to finally be free of this financial burden.
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