Currently, it is estimated that the average individual debt across Australia is about $50,000. It is just logical that more consumers are now struggling financially. According to experts, credit card debts are among the most common types of debt there are. That is why when the concept of credit card consolidation was first introduced, many consumers eagerly took advantage of the strategy.
Through credit card consolidation, you could unify your outstanding credit card debt into one. This is advantageous as you could focus on only one credit card debt instead of dealing with many at the same time. You could possibly save on costs as your interest rate payments could be lowered significantly. You could also avoid shouldering other charges and possible penalties, especially if you make late payments.
Credit card consolidation could be made more possible through balance transferring. You could take a new credit card, particularly one with special introductory rates on balance transfer. Then, you should repay all your outstanding payables on your other credit card accounts through that new card. That way, you are transferring your credit card debts into one, which has lower rates.
When you do balance transferring for credit card consolidation, just be sure to repay the debt before the introductory period ends. Otherwise, you may possibly rack up a bigger amount of credit card debt. New credit cards with very low balance transfer introductory rates tend to assume higher interest rates after the introductory period specified ends. However, there are still many credit cards that offer lower balance transfer rates for life. All you have to do is to find them.
Paying your bill
Credit card consolidation should be carefully managed. For balance transfers, you should intend to repay credit card debts incurred in as short as six months to 12 months. Do so especially if the card you have used for credit card consolidation only offers low balance transfer rates on introductory basis.
You could also do several other strategies when handling credit card consolidation payments. Try as much as possible to overpay your bill every month. Do not settle just the minimum payment required from you. This way, you could significantly slash your debt each month so that principal amount for interest rate computation would be lowered. If you keep on doing so, you could possibly and effectively minimize the overall length or duration of your debt.
Want the best for credit card consolidation?
Carefully look at credit card consolidation before getting into one. You should study available options very well before you repay your credit card debts through balance transferring. Know the risks you may take and the possible setbacks of credit card consolidation. What if you make delayed payments? What if you do not repay the full debt amount before the target duration? Would credit card consolidation help you save more costs or would it just worsen your financial crisis?
Once you fully understand the pros and cons of credit card consolidation, only then would you be ready to get into it. In the end, stick to your resolve to slash the number of your credit cards so you would not be tempted to spend using those plastic cards again. Through this, you could avoid getting into another credit card problem in the future.
Andrew is has been working in the finance industry for several years specializing in debt consolidation loan solutions.