Is Consolidating Credit Card Debt Right for You?
If you feel as though you are drowning in bills and feel that you are not making any headway with far too much of your monthly payments going toward interest.. you may want to try consolidating your credit card debt. This is a simple way to lower your monthly payments and pay less interest.
By consolidating credit cards, you could get yourself out of debt faster and start moving toward your financial goals. Here are a few factors you should consider when you shop around for a new credit card.
Find a Credit Card with a Lower Interest Rate:
One of the single best ways to consolidate credit card debt is to find other credit cards that have a lower interest rate than the cards you currently have. When you find a card (or cards) with a low-interest rate, you can then transfer the balances from your old cards onto the new credit card accounts.
You’ll reduce your monthly payments and start saving right away on interest. With more of your payment going toward the principal you will be able to get your balances paid down faster. Many cards even offer introductory rates with no interest on balance transfers. This can be a great way to finally begin making a dent in your credit card debt. If you are considering consolidating your credit cards, finding a lower interest rate is the best way to start.
Do Not Apply for More Than One Credit Card in a 90 Day Period:
If you plan to apply for more than one new credit card.. do not apply for more than one card in any 90-day period. Applying for too many credit cards at once may give creditors the impression that you are in financial trouble and your application will certainly be denied. Also, keep in mind that each inquiry deducts several points from your credit score.
If you have excellent credit, you may be able to get away with safely applying for two credit cards. It all depends on your credit history and your current credit scores.
Do Not Close All of Your Old Credit Card Accounts:
After you’ve found a card with a better interest rate and transferred your balances, you may be ready to cancel your old cards. However, even though the goal is to consolidate credit card debt, you shouldn’t necessarily close the other credit card accounts, as doing so can negatively impact your credit score.
A large part of your credit score is based on the amount of credit you have available versus how much of that credit is being used. By closing out the old accounts, you will be reducing the amount of available credit you have which makes the ratio of credit being used much higher. It may be better to leave the accounts open and make a commitment not to use those cards.
In Consolidating Credit Card Debt – Negotiate With Your Creditors:
As you are consolidating credit card debt, you may wish to try negotiating with your existing creditors. You can do this by calling your creditors and speaking with them.. explaining that you are interested in consolidating your credit card debt at a lower interest rate.
Ask if they are willing to work with you by lowering your interest rate and allowing you to transfer a balance from another higher interest credit card. Many of them may be willing to help if they believe you may take your business elsewhere.