Should You Consolidate Your Credit Card Debt?

One of the most demoralizing things in life is credit card debt.

Credit cards can be useful in helping you manage your cash flow, as well as help you build a credit history.

The flip side, though, is debt.

Credit cards can come with high interest rates, and paying them down can become a difficult exercise — and even seem futile.  Without a solid plan, and way to ease the transition, paying off your credit card debt is beyond challenging.

One way to get moving with credit card debt pay down is to consolidate your credit card debt.

How Debt Consolidation Helps


Credit card debt consolidation helps because you are able to lump all of your credit card debts together, and make only one payment.

In many cases, your debt consolidation loan will come with a lower interest rate than what you pay right now on your credit accounts.  This means that more money will go toward paying down the principal, rather than being spent on interest charges.

It’s also nice to have only one payment to make, rather than making several little payments.  With one payment there’s less chance of making late payments since you have less bills to tend to.

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Debt consolidation keeps things simple, and can provide you with the encouragement you need to keep going with your debt repayment plan.

Secured or Unsecured Debt Consolidation?

consolidate credit card debt

Wouldn’t it be nice to consolidate all of that credit card debt?

The next decision you have to make is whether to use secured debt consolidation, or unsecured.

In most cases, if you can get an unsecured way to consolidate your debt, you are better off.  Whether you get an unsecured loan to pay off your smaller credit card loans, or whether you go through an accredited program, unsecured debt consolidation means that you don’t have to tie your consolidation efforts to an asset.

It could even mean using a balance transfer from one credit card to another to consolidate your loans.  Many do this with 0% APR balance transfer offers.

I did this years ago when I battled my credit card debt.  I took the high interest balance from one card and transferred it to 0% APR or low-interest APR cards.  This was huge in helping me eliminate my credit card debt.

With a secured debt consolidation loan, something is on the line.

Your home is usually what is used to secure a debt consolidation loan.  This means that if you are unable to make your payment, you could lose your home.  Before you decide to secure your credit card debt with your home, you need to think long and hard about the possible outcomes.  You need to be sure that you will be able to handle the payments.

Remember, too, that any debt consolidation loan, secured or unsecured, is likely to come with loan fees and other costs, so factor that into your calculations.

Sometimes It’s Better to Just Make a Plan

Another option is to make your own plan.

You don’t need to consolidate your credit card debt in order to be successful.  List your debts in order, and begin making extra payments toward them. You can pay them down faster than expected, and use a debt snowball or some other method to reduce your debt.

However, you will be making individual payments on each card, so it’s important to be prepared for this, and organize yourself so that you aren’t missing payments.

Whether you consolidate your debt, or whether you simply make a debt reduction plan, it’s important to have an idea of what to do next, and stick with your plan.

Once you pay off that debt, you will feel much better.

Have you ever consolidated credit card debt? How did you do it?

Published or updated October 1, 2012.

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