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Here we are: NOT talking about Credit Card Debt Consolidation or talking about credit card consolidation programs run on your behalf, known as a DMP.
Here we examine steps that you can take yourself for strategic credit card consolidation, programs of self-help including with the repayments made on any credit card; consolidation of cards themselves and your own repayment activity. These approaches do not involve credit card consolidation companies:
Non Profit Credit Card Consolidation
The following are non profit credit card consolidation approaches that can help you better manage card usage and the cost of borrowing:
1. Consolidation Of Credit Card Use
2. Balance Transfers Onto A New Card
3. Balance Transfers Onto An Existing Card
4. Credit Card Consolidation Debate
5. Repayment Techniques
1. Consolidation Of Credit Card Use
Credit card consolidation companies are not required in order to make real progress in dealing with card debt. The major benefit of a program run by "credit card consolidation companies" is that they negotiate lower interest rates. You can do this yourself. You can also manage your own card usage better.
The first question to ask yourself is why am I using different cards if I am not paying the monthly statement balance in full? Credit card consolidation of use involves examining the interest rate that you are currently paying on each. Where the credit limit allows, you would be better off through credit card consolidation using only the card with the lowest rate. If you're using a card to get miles or other benefit - but paying interest, you might be shooting yourself in the foot.
Credit cards consolidation involves questioning why you are using various cards. Through credit cards consolidation repayments are easier to manage including due dates, checks to write, accidental late payments and spotting fraudulent transactions. Similarly, things are harder to mismanage after credit card consolidation. Are you paying interest on a balance that you could easily step in to terminate? Are you simply wasting money paying interest? If your paying card interest at the same time as making a liquid savings deposit then your not saving in the big picture.
2. Credit Card Consolidation - Balance Transfers Onto A New Card
Credit card consolidation to take advantage of an introductory or promotional interest rate. Credit card consolidation here involves transferring the balance from one or more card onto a new consolidation credit card, for the purpose of enjoying a much lower or zero percent interest rate - as you aggressively attack the balance.
This credit card consolidation tactic is useful only if you can pay off the new consolidation credit cards balance, or the vast majority of it within the introductory period. Consolidation credit cards may for example feature a low rate for 12 months. The post credit card consolidation savings on interest repayments, compared to the previous situation may be significant. This money should be plowed back into the new repayments. The idea with credit card consolidation is not to carry on using the card or pay the new "minimum due" only.
Credit Card Consolidation Pros
- Reduces the interest burden - after credit card consolidation you pay off the credit card bill at a lower interest rate.
- Wastes less money on interest with more available to put towards the principal.
- Bills are consolidated into a single payment making things easier to manage.
- Lessens the risk of making a late payment.
- One account to monitor for any fraudulent charges. Less likely not to spot or suffer a fraudulent charge.
- Save more by abandoning any annual fee cards.
- Low interest balance transfers leave you more money to make larger repayments thus paying debt down faster.
Credit Card Consolidation Cons
- Consolidation credit cards fee of up to 5% of the balance transferred - adds to the new balance.
- Rate hike after the consolidation credit cards introductory period.
- Carrying a large balance across the introductory rate threshold could wipe out gains.
- Could end up worse off if you fail to attack the new balance - using all of the money you previously used for repayments; ideally more.
- Late payment could mean a sudden end to the introductory rate.
- Repeated transfers look bad with card consolidation, credit availability and later interest rate offers can be impacted.
- Post card consolidation credit terms including interest rate could change with short notice.
- May impact credit score
- Investigate hidden fees
- Zero % / nil transfer fees: Equals a shorter introductory period; equals a higher post introductory rate.
- May not qualify for this type of credit card consolidation. Companies may decline to offer 0% or low rate and savings potential.
3. Credit Card Consolidation - Balance Transfers Onto An Existing Card
Transferring balances onto a current lowest interest rate card is a different approach to credit card consolidation. Companies with which you have established a relationship may accept the balance for no fee, and/or may increase your credit limit to accommodate. Call and request. Pros as above.
Credit consolidation companies or credit card consolidation services offer three core service alternatives to mitigate the debt burden (Loan, Plan, Settlement). This discussion is about do it yourself efforts and choice. Continue reading the credit card consolidation debate: