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Credit card debt can be a nightmare of a problem and
unfortunately there a lot of people who are in this situation
this today. Credit card debt consolidation is generally
regarded as the most important step in credit card debt
reduction and elimination.
Which type of ‘Credit card debt consolidation’?
One type of credit card debt consolidation is the
process/strategy to consolidate debt from multiple credit cards
into a lesser number of credit cards (ideally only one or two
credit cards). Credit card debt consolidation is sometimes also
called a balance transfer where you transfer your balance on one
credit card over to another credit card. Generally, the balance
transfer (or credit card debt consolidation) is done from credit
cards with higher APR to credit cards with a lower APR. Credit
card debt consolidation can also be achieved by applying for a
bank loan (at a lower interest rate) and using that towards
paying the debt on the higher APR credit cards. This loan is
then paid-back to the bank in the form of monthly installments.
It may be secured by real estate or unsecured, depending on your
financial strength.
The introductory APR is the most important thing to look for
when you are looking to consolidate credit card debt using the
first method. If you consolidate credit card debt to a card that
has a low introductory APR (i.e. 0%), the first thing you get is
a breather/relief in terms of the rate at which your credit card
debt has been growing. Based on how long that 0% APR period is
(generally you will look to consolidate credit card debt with a
credit card supplier who offers 0% initial APR for a period of
at least 12 months), you will at least be able to temporarily
break the growth rate of your credit card debt. The longer the
introductory period, the better.
However, you should not ignore the standard APR when you
consolidate credit card debt. This is the interest rate that
will be applied to your balance after the expiry of the
introductory low APR period that was used to lure you to
transfer your balance to the new credit card supplier. If the
standard APR is too high and you know that you will not be able
to clear off the entire credit card debt during the low APR
period, that credit card is probably not the best for you.
However, if you think that you will be able to clear off the
entire credit card debt during that period, you can make some
compromises on the standard APR of the credit card to which you
consolidate credit card debt.
When choosing to use the second type of credit card debt
consolidation, it will be important to find the appropriate
lender. The
subprime mortgage crisis
has taken its toll on the lending industry. For more info, visit
debt consolidation loan.
It would also be wise to visit the
Federal Trade Commission and read the related
laws that apply to credit card companies, credit counselors,
debt collection agencies, and credit card debt consolidation.
It’s important that, with credit card debt consolidation,
you also develop thrifty and prudent spending habits; otherwise
credit card debt consolidation would really be of no use and
you'll find yourself back in the same situation within a few
short months.
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