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Credit card debt consolidation |
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Written by Jayson Brock
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Friday, 18 April 2008 |
What is credit card debt consolidation?
There are hundreds of sites with advice on credit card debt consolidation. You can pick up a USA Today or Local Newspaper today and find several articles about the overwhelming about of Credit Card Debt Americans have. The issue is that consumers are receiving offer after offer to sign up for new cards, combine balances and all at lower interest rates. This leaves them with the false feeling of having positive cash. They eventually fall into the trap of using available balances and falling into deep debt.
There are numerous consultants and companies that provide professional advice on credit card debt consolidation. So what is this “Credit card debt consolidation” that everyone is talking about? Why is it such an important topic?
“Credit card debt consolidation” refers to consolidation of the debt on various credit cards into a single credit card (or a couple of credit cards). Generally, you move from a higher APR credit card to a lower APR one. You might ask ‘why?’ If you look into how the vicious circle of credit card debt works, you will immediately understand the logic behind that. Credit card debt grows in 2 ways. One is due to addition of new debt on account of fresh spends on your credit card and the second is due to addition of interest charges to the existing credit card debt. The first one is due to your use of credit card but the second one is due to interest charges which are calculated on the basis of the interest rate or the APR applicable to your credit card. So a lower APR rate means that your credit card debt will grow at a slower pace and hence switching over to a card with lower APR makes perfect sense.
The process of credit card debt consolidation is also referred to as balance transfer process (you transfer the balance or debt from one credit card to another). The credit card debt consolidation (or balance transfer) offers are made even more attractive by the credit card suppliers by associating various benefits with them. The simple logic behind offering these benefits is the fact that such a customer would be defecting from one of their competitors. The biggest benefit offered by these credit card suppliers is 0% interest on balance transfers (or credit card debt consolidation). This 0% APR is generally applicable for a short period of time i.e. 3-6 months, after which the standard APR is applicable. Other credit card debt consolidation offers include things like interest free purchase for a short period, reward points, etc. These credit card debt consolidation offers make the exercise of credit card debt consolidation even more logical and meaningful.
Credit card debt consolidation is a great way to eliminate credit card debt. The first step is to stop applying for new cards, stop charging new items and work on an easy budget that will work for you. We recommend calling a Credit Card Debt Specialist to assist with your current balances and make your monthly obligations manageable.
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Last Updated ( Saturday, 19 April 2008 )
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