Consolidating your Credit Card Debt: How to Make it Work for you
If you find yourself in over your head in credit card debt, or if you simply want an easier way to manage your existing credit card debt, you may consider consolidating your debt onto one credit card.
If you have good credit – and provided you do not already have too much debt – you will likely be able to secure a low, fixed interest rate credit card. In addition, you may be able to snag an even lower introductory rate. You can use this new credit card to transfer all of your outstanding credit card debt, thereby alleviating higher interest rate cards and multiple, monthly payments.
Debt consolidation is usually a smart move to make, although it pays to consider your actions after you have consolidated your debt:
- Make a budget – Once your debt has been consolidated, now is the time to sit down and make a firm, monthly budget, without all of the cards that you have been accustomed to paying every month. It is important to recognize your new debt, along with its due date and monthly payment.
- Cancel other credit cards, if necessary – Although you’ve no doubt heard many credit card experts tell you not to close credit card accounts because it will lower your credit score, the fact of the matter is that if you think – even for a minute – that you might be tempted to charge these cards back up, it will simply be in your best interest to close the accounts and eliminate the temptation.
- Make a plan and stick to it – One of the best things you can do once you consolidate your debt is to come up with a realistic game plan. Do the math and figure out how long it will take you to pay off your credit card if you put X amount of dollars on it every month, and then go from there. Make a commitment to pay at least a certain amount above the minimum payment each month so you won’t be stuck with a credit card payment for years and years to come.
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