Consolidating credit cards

Credit card consolidation is a popular solution for those with
significant credit card debt, usually distributed on three or four
different cards. Basically, this means putting all your debts together
on a single card, like transferring it all to one loan. Of course, the
goal is to pick a card that offers better conditions than what you
already have, in order not only to simplify, but also to reduce your
payments.

Since there are so many offers out there, and lenders fight over your
business, you can sometimes find solutions that can save you thousands
of dollars per year. If you consolidate your debt to a credit card
with low interest and 0% balance transfer, you can save considerably,
and pay off your credit sooner (which, of course, is the main goal
when dealing with credit card debt).

The most serious mistake people do when consolidating is to go though
the entire process just to simplify their accounting, and they don't
pay enough attention to how much they could save. Another mistake is
to close your zero balance accounts when consolidating. This
practically means you close some of your credit options, which is
never a good idea.

When you plan to consolidate, call your banks and explain the
situation. They want your business, and you'll be surprised how
flexible and willing to negotiate they can be, once you explain to
them that you have various options available to take your business
someplace else.

There are many web sites offering solutions for debt consolidation.
However, keep in mind that, while this is a comfortable and fast
solution, you don't have the options to negotiate directly with the
banks. Also, most often the best offers come from banks that want to
keep your business, so make sure you give a change to the banks you've
had a long-term relation with. If you're not pleased with the results,
take your money elsewhere quickly.

Consolidation is often a necessity for students, new graduates, or
people who have filed for bankruptcy some time ago. If you've handled
your payments well and managed to clear up your record to a certain
degree, there is no need to continue paying more than it's worth for
your credit cards. Sit down and go through the numbers carefully, and
think analyze the problem realistically. Don't forget to check your
credit report and your credit rating before you start anything - it
will help you plan and plead your case. Also, if your credit request
gets rejected, don't forget to ask for your free copy of the credit
report.

Of course, credit card consolidation is not a miracle solution for all
your financial problems. On the contrary, you may find that it
requires a lot of financial discipline to make the payment on time and
to straighten things up. However, it is less confusing than having
several small credits, and so it is easier to keep things under
control.

There is also the option of getting credit counseling, if things get
really confusing. A successful plan will make sure you make the
payments on time and regularly, without putting a strain on other
aspects of your life. Of course, it's a lengthy process, usually
taking one or two years - but it's worth the trouble.

Sometimes, you can lower costs by consolidating your debt through a
second mortgage - but be really careful about the hidden costs and
problems - you may want to consult with a specialist or two before
taking this step. Usually, this means that your home will become
collateral, and you may lose it if things go wrong. Also, costs add up
quickly and you may end up paying more than you initially thought.