One of the most prevalent financial problems with the citizens of United States of America Credit is credit cards debts. Upon a survey done, the statistics say that a standard family has a credit card outstanding balance of nearly US$8,000 and this is at it’s peak during the holiday season, wherein in many people would have piled up their credit card bills due to shopping and the expenses they incur because of this spending. To alleviate this burden of carrying huge credit card balance, there are certain ways and one of the good ways is by doing consolidation of credit card debt. One of the most excellent things that a card holder can carry is to possess a solid understanding of the “consolidation of credit card debt” concept.

Consolidation is the best mechanism for people who want to prevail over their credit card debts with flying colors and is the perfect way to improve their credit scores and credit worthiness. There are innumerable number of benefits for the cardholders who have the willingness to consolidate credit card debt. It is best advised that before any individual aspires to get into consolidation of credit card debts, they understand the complete pros and cons of this concept and consider certain things ahead of doing so. There are a few relevant questions and pertinent set of guidelines to be understood before we make use of the “consolidate credit card debt” concept.

What is the need for consolidation?

There are more than a few reasons to consolidate credit card debt and the prime reason is to get better or preferably lower interest rates on the new credit card. Before opting for consolidate credit card debt option, it is advised to save some money for yourself. Firstly, find out the interest rate offered on all types of credit cards, jot them down and make a note of the same. Check for the new rates and if the new rate is less than the existing rate then consolidation will prove to be advantageous. The basis reason why people go for this consolidate credit card debt concept is to ensure that life does not become complicated and to pay out their bills on time. Consolidation will help individuals to come out from credit cards mess and make appropriate lower monthly payments thus enhancing their financial position and better plan expenses.

When to opt for consolidating credit card debt?

It is very important and imperative that one should understand the need for consolidation of credit cards debts and especially when to do this. You can always seek help from professionals employed by various credit card companies. These professionals constant endeavor is to help people by giving good suggestion on how to consolidate credit card debts. Be of utmost care while doing the research to understand this concept better and one should not repent after getting into consolidation of credit card debts and hopefully be happy and merry that their choice is proving to be gainful. Doing the right research and analysis will certainly help people who wish to opt for this concept and save money for upcoming times.

Hints on consolidating Credit Card Debt

One of the best ways to consolidate existing credit card debts is to accumulate and transfer all the present outstanding balances on all credits cards onto a new credit card, which has significantly lower interest when compared to your previous cards. Through this method good amount of bucks/dollars can be saved as the annual interest percentage rate on some credit such as 12%-28% can be reduced to 10% or lower. Alongside consolidation will help you in collating all the existing monthly or bi-monthly repayments into one uncomplicated flat amount. The below mentioned are some important hints for cardholders who consolidate their credit card debts through balance transfers:

1. Charges induced because of balance transfer: Because of the primary reason that transfer of all the balances onto a new card at relatively lower interest rate will yield benefit to the cardholders, many a credit card companies charge a fee for this particular activity and a proportionate increase in charge will be made the higher the amount of balance transferred.

The ceiling put on these transfer charges or fees can be between $25-$50. And there are some credit card companies, which discard charging of transaction fee on the first balance transfer, but from every subsequent transfer a transaction fee will be charged.

2. Conundrum or Teaser interest rates: Whenever a balance is transferred onto a new card, an introductory or initial interest rate will be charged and this is called as “Teaser” or “Conundrum” interest rate. Always be sure in getting the information as to for how long the initial or introductory interest rate will be there on the new credit card you are willing to opt for consolidating the existing credit card debts. Also, get a clear-cut information regarding what will be the APR (annual percentage rate) once the introductory interest rate finishes off. Sometimes there are introductory interest rates of 4 percent that enlarge to 15 percent following six months; and an individual may just qualify for a credit card with teaser rate of 8 percent and a standard annual percentage rate of above 18 percent. So, having a good understanding of the eligibility criteria becomes very pivotal and essential.

3. Concerns and problems that arise because of delayed or late payment: It is more than likely and possible that one default payment or a payment error will wash off the advantage you gain out of this brilliant low interest rate earned because of the accumulated balanced transferred onto a new credit card. So, it is always important to check and understand if there is any late payment fee or behind the schedule fee along with any overdraft/over limit charges.

4. Re-emphasize and Re-confirm: Upon transfer of the old balance onto the new card, the new credit card company might send a memo or a communication confirming that the old balance got transferred fruitfully and effectively. But still get in touch with the old credit card company and get the same confirmed to be doubly sure as it is always “better to be safe than sorry”. Actually, the previous or old credit card company is supposed to send a statement confirming that the balance got transferred and the current balance is zero and in case they do not send this statement you have every right to ask for one.

5. Cease all old cards: It is best advised upon successful transfer of balance onto the new card, close or cease all old cards. Many people have the excitement or inclination of having an available credit line even after consolidating their old debts and transferred the balance onto a new solo card. In this process they might leave their previous credit cards open, but one should understand that too many open credit lines will interrupt an individuals chance of getting new financial aid.