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Credit card debt consolidation.

If you need help with consolidating credit card debt, find some of the leading methods, tips to follow and learn about the process below. Consolidating debt on a low interest rate credit card involves moving a balance from one card to another. The goal is to help borrowers pay off their bills in less time as well as save money. When doing this, it is imperative that the new credit card has a lower, or ideally zero percent interest rate. If this is not done then the entire approach will not benefit the borrower. Discover different ways borrowers can consolidate their credit card debt.

Advantages of low interest rate credit cards

Managing interest rates is one of the main keys to paying off and dealing with credit card debt. The lower the APR, the lower your monthly payment and the more of your payment goes towards the principal balance each and every month. Many experts say a low interest rate is the most important factor to paying off any bills in as short time as possible.

If you have a high interest rate credit card, and if you also have a high balance on that card, you are paying a lot of your hard earned money to "borrow" that money from the lender as interest. A lesser amount of your payment goes towards paying down the principal balance. Also, the minimum payment that the credit card company calculates for you to pay is only based only on accrued interest, so if you only pay that minimum payment every month you will never reduce the principal on your credit card debt. This makes the process take much longer.

Tip 1 - Credit card debt consolidation programs

If you decide to enter into a credit card debt consolidation program or use a third party to do this, expect that that they will do the best that they can to help you. Many consumers receive help as they will now be able to avoid the need to have to pay higher interest rates and expenses on their credit card bills. What you will do, or the company on your behalf, is negotiate a loan with a lower interest rate. This new loan will be the only bill that you need to pay on a monthly basis.




Many businesses, including non-profit credit counseling agencies, will help individuals get credit card debt help. They will usually operate as some type of consolidation company (either private or non-profit) and they focus their services on people that would like to obtain lower interest rates on their credit cards and pay less in interest expense. The company you work with will communicate with the collection agency and/or your creditors, and the company will also arrange for you to receive lower interest rates as well as a more affordable payment plan.

The various steps that you will follow in a credit card consolidation assistance program are somewhat the same as those in a so called “general” debt consolidation program. As with any help you ever receive, you need to be sure to ask questions and also to do your research so that you are aware of how the consolidation program works before you sign up with the service provider or enroll in the program. There are several pros and benefits of credit card debt consolidation programs, and they include:

1. You should be able to get late fees waived and get back on track with making timely payments.
2. You will be able to pay off the credit card bills and debts with a lower overall interest rate and costs.
3. You can consolidate multiple bills and financial obligations into one monthly bill for a more manageable payment.
4. You will not be harassed by phone calls from debt collectors. Find more ways to get help from debt collectors.

After you sign up for and enter into some form of debt reduction and/or credit card consolidation program, you will then need to pay your monthly payments directly to the company that you are working with. You will no longer have to continue dealing with each individual creditor or lender. You will also not need to pay multiple bills on a monthly basis. The company that you choose to work with will take care of communicating with the various other creditors and lenders on your behalf. You will need to pay that company, and they will then send your monthly payments until the bills and debts have been paid off in full.





Tip 2 - Consolidate credit cards by doing it yourself

You can also decide to consolidate your credit card debt on your own. This is possible to do, but in order to do this you will need an available account with a large enough balance. This is required so that you can hold and transfer your other debts on this one account. This additional account also needs to be at a lower overall rate than what you are currently paying or it will defeat the purpose.

The next step is to then transfer the outstanding balances to this single account and then to close all of the other, now unused accounts. After you do this, you will then just need to make your single payment each month. Since it is now only one payments, the process will be less complicated, easy to do, and saves times and money. It is easier than having to deal with several bills at once. Read more on zero percent credit card balance transfers.

Of course, you also need the lower interest rate on the account as after all your primary goal is to pay as much as possible towards principal (not interest) to try and reduce your credit card and other debt as quickly as you can. Find the best low interest rate credit card accounts.

If you decide to take this approach, when you do transfer your outstanding credit card balances to one account, you should not close every open account all at the same time as it could impact and lower your credit score and ratings. Even more important, for the account that you decide to consolidate to, you need to ensure it has a lower interest rate during a long enough duration of time. Also ensure that it doesn’t jump up to a high interest rate after only a couple of months of time. As always, make sure you read the fine print, understand all of the terms of the new loan, and also be sure to read the application carefully before signing up or transferring balances.

Tip 3 - You can always get a debt consolidation loan

Yet another common option for debt reduction and credit card consolidation is to apply for and get a so called debt consolidation loan. Instead of transferring balances to a credit card, or using a card to reduce your overall debt levels, this is a completely new and separate loan. In order for this approach to work it needs to be issued at either a lower interest rate or have a longer repayment period, which will in effect reduce the monthly payment.

You will need to use it to pay off all other bills and debts that you may have, including any balances on your credit cards, student loans, auto payments and more. So this acts as a form of consolidation. Read about the top debt consolidation loans for reducing debts.





This new loan is very similar to a personal loan and it will offer people a longer timeframe to pay off and eliminate all of your bills. Because the payment terms are spread out over a longer period of time, the payments can be lower than all your currently combined credit card payments or other bills. Even better, if you decide to get a personal loan using collateral, such as a home equity line of credit or a second mortgage, you may be able to get a comparatively low rate of interest.

One of the downsides to this option is that while your monthly payment will be lower, you will more than likely be paying off the outstanding debts over a longer timeframe so your total interest paid in absolute dollars will be higher.

Additional credit card debt consolidation methods

  • 1. Home equity loans. These loans often have lower interest rates than a credit card and also give you a tax deduction. The downside of a home equity loan is that the collateral is the house, so you need to ensure the loan is paid. Another disadvantage of using a home equity loan to consolidate debt is the low-pressure repayment terms. Unfortunately many lenders are not in a hurry for you to pay a home equity loan back, which can cause some borrowers to fall into trouble.
  • 2. Low interest rate (or zero %) credit card transfers. Low balance transfer rates still exist. However, rate “surfing” makes sense only if you can pay off your outstanding credit card bills within the time frame of the low introductory rate. You do not want to have the debt not paid off if/when the rate resets. While you may be able to get another low rate credit card, the more time that this goes on, and the more low rate transfers you complete, the more risky this becomes. Read more and find a zero interest rate credit card..
  • 3. A nonprofit consumer credit counseling agency can help you navigate the process. You may want this to be your first stop. They are experts in helping consumers reduce and get out of debt, they will work with your creditors regularly to get interest rates reduced and late fees waived. Sometimes what they will do is offer you the option of rather than consolidating debt, you need to pay them a fixed amount and they pay it out to your creditors. Read more and find a listing of the numerous non-profit credit counseling agencies, many of which offer free credit card debt consolidation services.
  • 4. Renegotiate the payment and debt terms with your lenders. Or talk to a professional credit counselor (see above) to have them renegotiate your debt. Most lenders or creditors would rather renegotiate than sue you, repossess your home or car, or have to spend money to collect from you. You can go to your creditors and say something like, 'I know I am behind on my debt. Can we stretch out the payments?' It is pro-active and an honest relationship. Your creditors lose money if you default, or go bankrupt. Most lenders, banks and creditors will renegotiate any credit card debt due.

Consolidate all bills along with credit card debt

There are other approaches to take that can help as well. Also, if you can, you should strongly consider consolidating your bills, loans and debt from all accounts. As some families are in debt from “non-traditional” lenders such as payday companies or stores. One way to do this is to move the balance from all of your accounts (such as store cards and personal loans) and your higher interest credit cards to one lender with a zero percent, or lower interest rate.







If you have about $200 of debt on each of your high interest rate credit cards or maybe a payday loans, say at a rate between between 11% and 22%, and if you move those balances onto another card which carries a low 5% interest rate, the significant money you are saving (potentially hundreds of dollars) by paying less in interest payments.

This approach allows all bills to be paid, no matter who the consumer owes the money too. This approach will allow you to reduce the principle on all of your other loans and debts, including your credit cards. The point being that borrowers can save money by consolidating all loans, debts, and bills at the same time - not just credit cards..

By Jon McNamara

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