Is Credit Card Debt Consolidation A Good Thing?

Debt consolidation can be looked at as one potential solution to dealing with debt. If you’re struggling under the weight of a heavy debt load, and finding it hard to meet your monthly debt payments, then the idea of consolidating all of your debt payments into one big payment sounds pretty good.

This is especially true with credit card offers that allow you to transfer balances to a new credit card account. They usually offer you a 0% interest account for six months to a year. That sounds really great, but you have to be mindful of the interest rate on all the accounts your considering transferring. In the long run, is it going to be a better deal for you?

If you’re making the minimum payment on a credit card that’s at its limit, say $1000.00, and the interest on that card is at 14%, make sure the credit card you’re transferring your balance to doesn’t boost your interest rate up to 25% after the initial introductory period. Many people make this mistake because they focus on the 0% for six months to a year sales pitch that’s on the front of the envelope and forget to check out the long-term loan conditions. If you know for sure that you can pay the entire balance off before the introductory period ends, then it’s a good deal.

Unfortunately, most people juggling their credit card balances between credit card accounts can’t afford to pay more than the minimum payment. So, they are rarely able to benefit from these types of offers. I personally have had some great offers in the past, where I was able to transfer the balance on two or three credit card accounts to one account with a much lower interest rate then the original cards. That’s when this type of debt consolidation works well. I have to say, that I am seeing less and less of these types of offers.