Consolidating credit cards
Does consolidating credit cards seems like a a good idea always , right? Well, maybe or maybe not. There is no good answer here or simple one if you guessed it right. Consolidating your credit card is done for a number of reasons and for some benefits that you can immediately get to. Lets suppose your have 5 credit cards with balances, this doesn't look good on your credit score. Having lots of credit cards equals to much higher risk borrower profile, than a borrower with single credit card, which is compounded by any missed payments you make because of having so many cards. Plus, if you have one minimum payment a month for 15 dollars on one card, that's only 15 dollars that you have to scrape up to pay (though you should always pay more than your minimum required payment anyway, but that's a tip for another article). If, on the other hand, you have 6 credit cards, all of which require a 15 dollar payment each month that means you're paying 90 dollars a month. That's 1080
dollars a year to the 180 of a single card. .
Pay off credit card
One big reason you want to consolidate your credit cards is to get a lower interest rate credit card. This increases your principal pay down because your interest is low and the debt retires much faster. Always try to get the lowest interest rate card that you possibly can. If you have several cards, take the lowest interest credit card or call them and ask them if they will lower you rate. If you transfer your balances onto the lowest interest rate, you may not get any cash, but your principal pay down would be much faster. (especially if you have a big debt that will take you a very long time to pay off) This also lower your monthly cahs out flows since you have lower payments combined.
Consolidate credit card bills
Given with these two reason to consolidate credit cards why many people avoid it? Because they have not taken the time to analyze their credit card debt. However if your follow this method you will retire your credit card debt much faster since its paid off with more principal. If, on the other hand, you are using one or more credit cards to avoid having to pay the charge of a missed payment on another set of cards, then you're not actually reducing what you owe at all. Instead, you're stalling yourself and ultimately paying much, much more money than you would if you were paying any of your monthly fees. These things tend to catch up on us, and somewhere in the near future, the procrastinated payments are going to have a snowball effect that may end up wiping you dry.
Another important thing to do is to stop spending on credit cards. if you continue to spend on credit card and keep adding to the debt nothing will work in the long run. Because now you are not making as much money, yet your are spending to accumulate debt.
There are several alternatives to this. You can improve you income and that will give better cash flow. You can get a pastime job, ask for promotion with higher take home pay or even turn a hobby into cash paying work. You can chose to start selling products on E bay from home. Thus if you increase you income rather than expenses you will improve your personal balance sheet and lower your debts considerably.
Lastly you can always get debt counseling, and go through a debt consolidation program. That should be your last alternative though. Many American families have been through the recession and have chosen this last alternative. You need to get yourself out of debt, before the bank starts knocking.
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