Is consolidating credit card debt a good idea
The option that best suits you depends on your overall debt load, credit score and history, available cash and other aspects of your financial situation, as well as your self-discipline.
Consolidation works best when your ultimate goal is to become debt-free.
The counseling agency will have some set criteria they use that will identify which of your accounts can be accepted into the debt management (DMP) plans they offer.
The credit counselor uses their automated system to contact the credit card companies you owe, putting forward a repayment plan.
Whichever one has the highest annual percentage rate (APR), that’s the one that gets the focus of being paid off first (while still making minimum payments on your other cards, of course).
Once that card is entirely paid off, you move on to the one that has the next highest APR, and so on.
To attack your debt effectively, use the following strategies.
If you have multiple credit card accounts or loans, consolidation may be a way to simplify or lower payments.
Some creditors might be willing to accept lower minimum monthly payments or change your monthly due date because they would rather get paid less on a regular basis – than not get paid at all.
Here’s what you need to know if you are considering these options for consolidation: Transferring different debt balances to one credit card account Many credit card companies offer zero-percent or low-interest balance transfers to allow you to consolidate your debt on one account.
Before you choose a card, calculate whether the interest you save over time will wipe out the cost of the fee.
There is no one true “best” way to eliminate credit card debt, as doing so all depends on your individual situation.