Consolidate personal debt - Finance - Banking

Men and women who are in debt (credit card debt) frequently get to hear this assistance 'Consolidate credit card debt'. So, what does that 'Consolidate credit card debt' mean? Properly, fairly basically, 'Consolidate credit card debt' indicates consolidating the debt on numerous credit cards into 1 (or two) credit card. This consolidation can be done either by way of a low interest bank loan or by transferring balance to a new credit card (i.e. transferring the quantity you owe, on 1 or way more credit card, to a new credit card(s)).

So what really should you do when you are looking to consolidate credit cards? Properly, the key thing to look for is the APR or the annual percentage rate. Whatever method you adopt to consolidate credit cards, APR will normally be the key in fact, you could say that it is the sole criteria to look for. So, if you use a bank loan to consolidate credit card debt, the interest rate on the bank loan really should be lower than the APR of the credit cards whose debt you are consolidating. Similarly, if you are moving to one more credit card, you ought to make positive that the APR of the new credit card is lesser than the credit cards whose debt you are consolidating. On the other hand, there is a catch that you ought to be aware of when laying a strategy to consolidate credit card debt. The APR rates advertised by most credit card suppliers are the brief term APR rates which are meant to lure you to consolidate credit card debt with them. By brief term we mean APR rates that will applicable only for an initial period of less than 12 months or some other period following which the APR rates improve. When you go on to consolidate credit card debt with these credit card suppliers, they will provide you a lower (even %) APR for the initial 6-12 months and a a lot higher APR following that. You really should check what this higher APR rate is. Your decision to consolidate credit card debt will be fruitful only if the new APR rate is lower than or equal to the APR on your existing credit card. You may well check with your existing credit card supplier to see if he is able to lower your APR (if that works, it will make issues seriously effortless for you).

Just before you move on to consolidate credit card debt you really should understand that consolidating credit card debt will be helpful only if you pledge to adopt and adhere to disciplined strategy to credit card usage i.e. controlled spending and common/timely payment of credit card dues.

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