Best Credit Card Consolidation Deals

Credit card consolidation is the process of combining all your debts into one loan in order to pay off these debts faster.  If you have a number of loans from credit cards, store cards or overdrafts you will have to pay each one the minimum amount each month.  These monthly payments can add up and be a strain on your finances.  If you use credit card consolidation you can put all your debts together which lowers your monthly minimum payment, reduces the rate of interest and makes managing your debt easier.  It is very important to make your payments on time. If you default on even one payment you could see the rate of interest rise to the normal, much higher level.

Credit Card Consolidation

By S.E. Kirk

It is not uncommon for families or individuals to find themselves in the midst of credit card debt. Many people wonder if credit card consolidation is for them. What is involved in this process? Basically, a credit card balance transfer takes place so that all your credit cards are consolidated into one card. You receive one statement and deal with one company for the full balance of all your cards. Several companies offer this type of deal, and a Citi credit card is a good example.

Benefits:

Credit card consolidation can lower your monthly payments, which is very appealing to those in need of tightening their budgets. Combining all your credit card bills into one means that you only pay one bill. If you were paying the minimum balance of fifty dollars on three credit cards each month, you were paying a total of one hundred and fifty dollars on credit cards alone. The interest you were accumulating was at a high rate, as well, extending the time you are required to make payments and the total balance to be paid off.

But if you were to transfer the balance of all three cards onto a new Citi credit card, you would combine the balances and accumulated interest into one new balance. The Citi credit card offers free interest on balance transfers for twelve months to qualified card holders. So you will no longer be accumulating interest on the unpaid balances, at least for the first year. During this time, you can either pay only the minimum fifty dollar (for example) monthly payment, saving yourself one hundred dollars out of pocket each month, or you can continue paying the one hundred and fifty dollars monthly to quickly reduce your debt and avoid the interest that will arrive after twelve months.

In addition, with a credit card balance transfer, you will often get a better interest rate. The basic Citi credit card offers an interest rate of 10-12% after the first year on your balance transfers. Both of these benefits add up to more cash for other expenses.

Drawbacks:

The drawbacks to credit card balance transfer are worth considering before you make a decision about your credit card consolidation.

When you transfer your balances to a credit card with an interest-free trial period of six months to a year, keep in mind that the interest will go up after the trial period is up. So if you haven’t paid down your balance by then, get ready to accumulate more interest and make more payments.

Also, most card companies will include in the terms of service agreement a clause about default. Defaulting on your agreement about the interest-free trial period can include making a late payment, making a payment that doesn’t go through, or going over your line of credit. When you default during your trial period, the interest-free part of the agreement is made null and void. This means that you are no longer entitled to the free interest on your credit card balance transfer. Most companies will assess a very high interest rate after a customer defaults.

 How To Do A Credit Card Consolidation

 Credit Card Consolidation Help