Credit Card Debt Consolidation

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America's Need for Credit Card Debt Consolidation

Shopping sprees, holidays, eating out, that's what credit cards are for! But with $741 billion in credit card debt in the United States and 1.3 million Americans filing for bankruptcy last year as a result of unmanageable credit card balances, it's obvious that as consumers we are living beyond our means. If you are finding yourself struggling to meet the minimum payments on several credit cards that are nestled in your wallet, you should seriously consider credit card debt consolidation.

What is credit card debt consolidation?

In simple terms, credit card debt consolidation means combining all of your credit card balances into one single loan with one monthly payment.

How to achieve credit card debt consolidation

There are several options available to you:

  1. If you have a number of credit cards, check to see which offers the lowest rate of interest. Some may even be offering 0% interest for a fixed period for balance transfers from other cards. If you transfer all your balances onto one low rate card you should be able to pay more than the minimum monthly amount and pay back the debt. Keep a careful eye on it though as 0% balance transfers often have a limited time period and you may have to keep moving the balance.
  2. Another, perhaps safer option is to consider a debt consolidation loan. As the average credit card interest rate is 12.02%, credit card debt consolidation into such a loan will be highly beneficial. They generally have much lower rates of interest and you will only have to make one affordable monthly payment rather than several minimum payments.
  3. If you are a home owner, another useful source of credit card debt consolidation is a home equity loan. Home interest rates are at their lowest in many years, so exchanging debt from your credit card for a home loan will help to greatly reduce the debt drain on your disposable income. However, before you take the plunge, make sure that you can afford to keep up the repayments as such loans are secured against your home and the lender will have a right to take it if you default on the loan.

Whatever choice you make, the most important thing to remember is that once you have achieved credit card debt consolidation do not start charging the cards again. Either cut them up, burn them or lock them up so that the balance is paid in full at the end of every month. Otherwise you will end up in a worse mess than you were in before.