We’ve all heard the phrase “debt consolidation debt consolidation”, especially regarding credit card debt consolidation, getting hold of the debt you’ve racked up with numerous credit cards can be an overwhelming. If you carry balances on multiple credit cards heading into the New Year, now is definitely the time to consider debt repair. Holding several cards means paying several monthly bills, each with different interest rates. Refinancing your debt may also give you an opportunity to save money.
Credit Card Debt Consolidation: Things to Consider
Debt consolidation and in particular credit card debt consolidation is something to definitely consider as one of your New Year’s Resolutions. Here are some key points to mull over before you pursue debt repair:
1. Every Case is Unique
Every single case is unique. Debt consolidation isn’t some one-size-fits-all solution that fits every single person and their problems. First ask yourself: how much debt do I have? Gather all of your credit card statements, and add up how much debt you owe your creditors. How much can you pay per month? The goal is to pay off debt quickly, managing as much as you can per month without breaking the bank. How long is the low-APR window? A longer APR window gives you time to pay off the debt before the rates go back to normal.
2. Transfer Impacts
Consolidating credit cards and leveraging low balance transfer offers can in the long run improve your credit score, no doubt. However, to get to this end goal, you need to be careful about transfers that can rack up unforeseen fees and impact your credit report. To come to your credit score, there is a utilization ratio. When you consolidate the cards, your consolidating will have an effect on this ratio, which can temporarily lower your credit score until you get it under control. If you’re going to consolidate, make sure you’re ready to really pay it off and get ahold of your debt.
3. 0% APR isn’t FREE
While the 0% APR label may seem enticing and appealing, it’s not as free as you may think. Balance transfer fees are typically charged, which can range from 2 to 5 percent of each balance transferred. Despite the upfront costs, you’ll still enjoy substantial savings in the long-term. But it is still something to consider if you’re staring down credit repair.
4. Everyone Isn’t Trying to Help You
Credit counselors and other industry professionals are going to try and take advantage of your admittedly debt-filled situation. These individuals want a cut of the cake too, which is why they are going to hold your hand and demand payments for every step of their support. The world can be a dark place, and some dark individuals lurk in the shadows of debt consolidation, waiting to take you in with open arms. Be sure to read the fine print before you work with someone like this.
Consolidating Debt Planning
Kicking off a New Year with a debt consolidation plan is definitely worth considering. Now is the perfect time to really understand your finances and what you do and don’t owe lenders.
By breaking free from their grip, you’ll feel like an entirely new person soon.
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