Should I Consolidate My Credit Card Debt?
Unlike general debt where answers to problems are rarely consolidated, credit card debt consolidation is often worse. Credit card debt consolidation is considered by many to be the first step towards eliminating card debt. However, before you take the first step towards consolidating your credit card debt, you need to understand that consolidating credit card debt (or using balance transfers) is the action taken to clear your credit card debt. Your credit card debt consolidation is not just a mechanism to get rid of problems for a while.
Credit card debt consolidation is a good choice for more than one reason; Not only do you get help from increasing your credit card debt, but you can also get other benefits. Many card issuers offer new users who transfer in existing balances which can be very attractive.
Almost all offers to consolidate credit card debt / balance transfers have an initial period with a low April as low as 0%. In fact, this is one of the main reasons why consolidating your credit card debt is an attractive choice.
In addition to low APR, offers for balance transfers often include benefits such as 0% interest for every purchase made during the first few months after balance transfer. This is another thing that reduces the rate of increase of your credit card debt. Of course if the goal is to reduce or write off debt then a new purchase is not the highest priority! These are the two most significant benefits that credit card issuers offer to attract new clients into their credit card debt consolidation.
After this main benefit there are other benefits such as additional prize points on the prize publisher. These reward points can be redeemed with other interesting items / rebates / rewards etc., but the aim is to encourage you to spend more money and increase, not reduce your debt!
Sometimes, a new credit card might be a better card for your current spending needs both in terms of credit limits and how you use a new card. For example, a new credit card might be a brand co-branded by an airline that you use frequently. The credit card you are consolidating might open a discount offer for you. But usually all of these offers encourage additional expenditure.
The most important thing to remember when consolidating your credit card debt is the reason for doing so. If the goal is to reduce debt and manage payments, then you can and should ignore any offers that will increase your debt. Balance transfers are not offered by card issuers to make it easier for clients to reduce their debts – the opposite is true! As a credit card user, you must use the tools offered by the card issuer for YOUR benefit, not the bank!
Good luck reducing your debt through disciplined credit card consolidation and balance transfers.