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  Is It Wise to Consolidate Credit Card Debt?With today's high debt to income ratio, and the increasing interest rates on things like revolving lines of credit and credit cards, it's no wonder there are so many seeking to consolidate their high interest debts into one. Not only is it much simpler to pay one company instead of five, but you also may find an added benefit when it comes to a lower interest rate - if you're careful.When looking into the possibility of taking all of your debt and putting it with one credit card or financing company, there are some questions you should ask yourself. First of all, ask if your overall interest rate will be signifigantly lower. Also of great importance, look at exactly what your monthly payment will be and if that amount is lower than what you are currently paying on the sum of your multiple credit cards. Ultimately, your sights should be set on getting out of debt faster with these higher interest rates and revolving credit, and also maintaining your good credit standing by paying the right amount, on time. Try out some hypothetical scenarios. There are some great "what if" calculators online right now that you can use as tools to gauge how long it will take you to get out of debt when paying a certain interest rate on your consolidated debt. Then, compare that to the period of time it will take you to get to a zero balance with a consolidation plan. If you are looking into a debt consolidation plan and the company you're dealing with is trying to loan you even more money, of course that will ultimately set you further behind. Try to deal with only the debt you have already incurred so you can whittle that amount down in a reasonable amount of time. When thinking about consolidation, consider your current income and projected income for the duration of the loan agreement. Ask questions about the loan or the new credit card you will be transferring your old debts to, such as set up costs, collateral and other fees you might not think of. Ensure that if anything unforeseen occurs and you are late on a payment or fall behind, you have not put crucial belongings such as your home or vehicle in jeopardy. Another thought to entertain is credit counseling through nonprofit sources either before or together with a consolidation of debt program. Organizations like CCCS, Consumer Credit Counseling, and other locally run nonprofit organizations can be excellent resources to give you support and guidance in getting out of the debt you're in. An objective financial counselor can help you come up with a budget plan based on your income and your amount of debt. They can help you to remain level headed and focussed to get out of debt. Consolidation of credit card debt can be a good idea if you are dealing with a reputable company and it is part of a well thought out plan to get out of debt and remain there. Many people consolidate for the simple reason that it is much easier to pay one bill every month as opposed to several. This way, your likelihood of getting late fees and confusing payments is reduced, and your life is a little easier. You will know if this consolidation offer is right for you if the interest rate is lower and based on your income and financial situation, it is going to be of an overall benefit to you. If there is any way you can manage to make double payments to pay down your debt, it will get you out of credit trouble so much faster. Possibly, you or your spouse could take on a second job to attain this goal. A powerful concept that many forget to stay out of dangerous, never ending debt is to live within or below their means. This is a powerful concept, and yet one that many find difficult to stick to with the rising living costs. This sounds like such a simple principle, but it's one that many of us have difficulty adhering to. Free Article Source: http://www.za77.org About The Author: Danna Schneider is the founder of Credit Card Catalogue, Credit Directory for information on low interest credit cards, special interest credit cards, and the best deals currently going in credit. She also manages an online financial and credit info blog called Prime Rate Credit : Loans, Credit Cards which focuses on prime rate offers on credit cards, loans and lines of credit, and where the prime rate can most easily be found. |