Debt Consolidation Loans

Credit card debt consolidation is a term that is seen and heard in the media a lot these days. There is so much advertising for this service that you have to know that someone is making a lot of money off of people with serious credit card debt problems. But once you understand what credit card consolidation is and how it works, it is very likely you can accomplish the same goals and get the same benefits without paying anyone ridiculously high fees.

The reason credit card usage has become so rampant mainly has to do with a worsening economy including increasing gas costs and rising prices for staples such as food forcing many families on fixed incomes to use credit cards usually with high interest rates. The result is an average family might have three, four or even more credit cards with high balances on them with interest fees sometimes being quite high.

Despite the customer-friendly language credit card companies use when attempting to lure you into using their cards and running up your debt even higher, these credit cards are making credit card companies a lot of money, and the companies want you to pay them down slowly so they can continue to charge big fees month after month. So the first objective of credit card consolidation is to get all of the outstanding debt onto one account (or card), pay down the debt quickly and possibly close those accounts entirely while making sure you secure the lowest interest rate allowable.

So the first core principle of credit card consolidation is to get rid of multiple creditors, and transfer all of your debt onto one account or at least fewer credit accounts. At the same time it is preferable to work with a creditor who is willing to work with you on the goal of reducing debt by providing you with a comparatively lower interest rate than what you were paying to the credit cards previously so more of what you pay goes towards the actual debt load or principal, and less to interest and fees.

One strategy that is often used to move debt to lower rate interest loans is to use zero percent short term offers from credit card companies. Now watch these because sometimes there are transfer fees that are as high as an interest payment. But if you can move several thousand dollars to a zero percent loan for six months, you can then work on paying off higher interest rate credit cards while more of the actual debt is being paid down, and less money towards interest. Be careful as you near the end of a zero percent, short term credit card because sometimes the interest rates on these will increase higher than any of your other loans.

The important point is that you take charge of your credit and not let it control you. Start a log or a spreadsheet where you document each credit card you have, what the interest rate is, the expiration date on short term low rates, what your credit limits are, and what your payments are. This kind of consolidation of your records will tell you which credit cards need the most attention and whether or not you should consider consolidating two credit cards into one or multiple credit cards into one source that you feel you can work with long term. Then you might consider finding a partner to help you make a plan to get out of credit card debt, and most importantly stay that wa