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One Simple Way of Consolidating Credit Card Debt

By Ian Middleton

Republish: EasyPublish™ Published: 24Feb2009 Word count: 833 Viewed: 284 time(s) Get Free Content For Your Site

Who is in control, you or the debt? It is very easy to let your credit get out of control unless you keep a close eye on it. Today credit card debt is one of the most burdensome things we face in these very testing times globally. I have to say that I feel credit card companies are charging far too much interest and making the situation worse for most of us.

Are you among the millions of consumers looking for ways to consolidate credit card debt and manage your finances better?

While it is important to get a good handle on your credit card accounts and ensure that you haven't extended yourself beyond your means, consolidating credit card debt itself can sometimes create even more financial hardship if you don't take great care in how you approach this significant financial issue.

A very common and indeed tempting way to consolidate credit card debt is to transfer the balance from one credit card company to another that is offering a zero or very low percent balance transfer offer for a limited period. Beware! What do I mean?

Well, let's say you have more than one credit card or store cards that you need to consolidate your debt on. You might have some cards with a few hundreds owing or even a few thousands owing. They might all have different interest rates applying to them which can be anything between sixteen and thirty plus percent.

If you are able to transfer the bulk of the balance to one or more cards with zero or low interest rates you can save a small fortune immediately. Now that has to be great news - yes?

Now before you rush out and apply for these offers there are a few things you need to be aware of when consolidating credit card debts.

Are you aware that each time you apply for a credit card they do a credit check on you and it leaves a record on your credit file? So if you know you are probably not going to get an offer to transfer money, do not apply as it will only show you in a poorer light on your credit score.

The "special offer rate" is just that and will increase at some point in the future so make sure you know up front when the rate will go up and most importantly by how much. You might find it is worse than what you are paying now.

Watch out for that empty card you now have in your wallet if you do switch. It will be saying to you "look, there is nothing on your statement and you have all that credit available to spend"

Many people fall into this trap. It is not so much how much credit you have to spend as how much more debt you can easily fall into. Don't do it! You will get deeper into debt and the credit card company will watch you do it with glee. They do not care about you they only care about one thing - PROFIT. If you can, put that card away somewhere safe and resist the temptation to carry it around with you.

The Trap Is Set

OK so now you have consolidated some of your credit card debts and have a nice new rate of interest to go with it, and life feels a bit easier right now. Read the small print carefully because what often happens is frightening. You have a bit of a surplus on your new card over and above the total you consolidated and you think to yourself I deserve a treat. So you go out and spend a little bit more on that new card because you can. The trap has sprung!!!!

You may well find that when you make your monthly payment on that consolidated debt you are only paying off the consolidated part of the debt and the new spending is not actually reduced at all until the original transfer is cleared. In the meantime the interest on that little treat is going to hit you hard as it is new spending.

What's The Secret?

When you do a balance transfer to consolidate credit card debt NEVER SPEND on this card unless it allows you to pay off the new spend first because it will cost you dearly! Simply use the special offer to your advantage and ideally only if you can clear the debt off within the offer period before the rate suddenly shoots up.

Consolidating credit card debt by moving balances to a lower-rate credit card is one possible way to save money on interest, but beware the dangerous pitfalls of teaser rates and empty card syndrome. Credit and debt have to be managed wisely, or you may find yourself in serious financial trouble.

I hope you find this article useful and you can start to use credit card debt consolidation offers to help you, not the credit card companies.

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