Debt consolidation, especially credit card debt consolidation, is fast becoming necessary in many quarters, as people use credit cards as a form of sustenance. At the same time, credit card companies are making a killing as they encourage more and more people to take out more debt on credit cards.
The average number of cards per household is now eight. This is bad news for your credit score as ironically, credit card companies or lenders in general consider people with more than three credit cards to be possibly financially irresponsible. They may have a point there as the more credit cards you have, the more difficult it is to keep track of payment due dates and avoid late payment fees.
To avoid this kind of trap, it is best to employ some credit card debt consolidation principles to not only reduce your debt but to eliminate credit card debt.
In order to achieve this, it is best to establish which credit cards cost you the most and what their credit limits are. Once this is established, you can then move your credit card debt from the most expensive cards to the low interest rates ones. Then you can destroy these high APR cards without necessarily closing the account.
This is important as closing accounts can affect your credit score. You can also apply to transfer your balance to a 0 interest rate credit card. This works best as you do not get charged any interest for a term of 6, 9 or 12 months depending on the provider.
The best scenario is to be able eliminate that debt before the term runs out. If not you can yet still transfer to another credit card company when the term reaches its conclusion. Such is the competition with credit card companies that you can easily transfer your credit from one 0 interest rate card to another for a long period. This however, can affect your credit history.
Another method of credit card debt consolidation is using a personal loan. This is generally the cheapest way as rates are much lower than credit card APR rates. The only disadvantage is that unlike credit card payments, you will have to pay a set amount each month for the duration of the loan term.
If you find yourself in a more financial distressed position, you can apply for a loan from the credit union in your local area. Credit unions are known to offer reasonable rates especially to low-income members. Needless to say you will have to apply for membership first.