The Best Ways To Consolidate your Credit Card Debt
If there is such a thing as a magic word in the world of credit card debt, it is consolidation. It is something that we all want and something that we think we all need. The average person gets approximately 1 million credit card consolidation offers per week (or so it seems) in the mail, with each one promising better interest rates, better credit limits and fewer fees. But you need to be careful with consolidating your debt because not everything that glimmers in the world of consolidation is gold. Let’s take a look at consolidation and the choices that are available to you.
The route that most people take when it comes to consolidating their debt is with a consolidation credit card. But there are several warning signs you need to look for. One of the most popular trends in recent years is providing separate interest rates depending on what you do with your card. This is especially prevalent with consolidation cards. You will have one interest rate for balance transfers (that may or may not be fixed) and another rate for new purchases (that also may or may not be fixed). Some cards even have a third interest rate for things like cash advances that can be significantly higher than the other two, combined! No wonder consolidating gives people headaches. When you add in the fact that most consolidation cards have a temporary introduction rate that can triple six months after you accept the card, while other consolidation cards used a fixed rate on transfers and have a high rate on new purchases, it can be very, very confusing. But there are other options out there for consolidating your high interest credit card debt.
If you own your own home, you can get a home equity loan to pay off your credit card debt. This is an ideal solution for many people since the one major asset they have is their house, and even the worst home equity loan has a better long-term interest rate attached to it then most credit cards. But be aware that you aren’t really disposing of your credit card debt, you are simply turning it into another form that still must be paid and this time, you are using your families’ safety and security as the collateral. Don’t enter into a home equity loan agreement before giving it the proper thought it deserves.
The next step for those looking to get rid of their debt is a visit to the friendly neighborhood credit counseling service. But make sure you approach your credit counselors with eyes wide open. The vast majority of these organizations are on the up and up and will do everything they can to reduce your credit card debt, but others aren’t quite as motivated. If you feel like you are getting a raw deal from a credit counseling service, don’t hesitate to move on to the next one. If you live anywhere near a major city, you probably have a dozen or so to choose from. Most credit counselors can help you reduce and consolidate your debt, but it isn’t a slam dunk. Some card companies can refuse to play along and there isn’t much your counselor can do about it.