If you are like millions of credit card users, you have thought at one point or another about consolidating your debt in order to get it under control. With rising interest rates and an ever increasing number of penalties and fine print, the urge and sensibility of combining your debts into one easy to make payment definitely makes sense. In this feature, we will outline some of aspects of credit card consolidation and how to navigate the benefits and pitfalls of the situation.
Always Know the Details
Whenever you are considering the consolidation of multiple credit cards, you must, must, must review all of the terms and conditions that come along with it. In many cases, you will be doing balance transfers on some of your credit cards as you move the debt from multiple places onto one particular card or line of credit. In some cases, it may not be worth it to move the debt; some cards have balance transfer fees of 3-5%, depending on the line. If the amount is either incredibly small or large, it is probably not worth it to move those balances in question; large balances will result in large balance transfer fees, while small balances will end up with an unnecessary, redundant charge in the form of said fee.
Get Rid of Excess Cards
It is great that you have moved or are considering moving your debt into one centralized account, but ask yourself: how did I get here in the first place? The answer is probably by having way too many cards that you really do not need. Eliminate the extra cards in your wallet, which will remove some of the temptation of spending unnecessary amounts of money that you do not have. This also gives you more clarity in how much you are spending; by receiving only one or two statements each month as opposed to several, you will have a better understanding of your finances.
Tackle the Core Issues
While it can be easy to blame our spending habits on the accessibility of credit cards, there are other underlying factors driving your decisions. Some people decide to seek financial consultations and advice, while others set a strict budget and follow it to the letter. Ultimately, your behavioral habits in regards to credit card spending have to change in order for the debt/credit card consolidation process to work. If you need help, don’t be afraid to ask.
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