Credit card consolidation in times of need (or want) often makes sense. One tip that should go without saying is to not make a new agreement that you can’t pay. It does no good to consolidate your credit cards for a lower monthly payment if that payment is still too high.
Here are some other important tips on credit card consolidation to help you make your decisions.
TIP 1: Make sure the debt consolidation company or credit counseling company you’re working with is reputable. These companies are a dime a dozen all over the Internet. You can also find dozens of different such companies advertised on the television and radio.
Just because you see the ad at a popular and reputable website, or see the ad on the television, doesn’t mean the company is a good one! Even rip-off companies need to advertise to draw in customers. Try to talk to someone who has used the company. Investigate them online and off and look for reviews.
TIP 2: If you’re using credit counseling or a debt consolidation company, really look at the terms of the agreement. This is one of the tips on credit card consolidation that can’t be stressed enough. Do the math yourself.
Even if the company is a good one, you shouldn’t just take what they’re saying as gospel. Crunch the numbers and figure out just how much you’re saving. Sometimes what you find can be surprising.
You may be about to sign an agreement that eases your burden today, but increases it tomorrow! If you’re getting a lower monthly payment, make sure that your interest rate is lower also. Otherwise your debt will accumulate at the same rate as before while you’re paying less.
This might seem like an acceptable solution if your payments are out of control. But it will keep you in debt longer and making payments longer. If you’re having trouble with your debt now, think about how you’ll be adding to it in the future. How likely is it that making bigger payments in the future to pay off more debt won’t be a problem?
Most good companies avoid this situation, but you should always make sure you’re not getting in deeper just in care.
TIP 3: This is one of the tips on credit card consolidation for the do-it-yourselfer. You didn’t contact a service but instead decided to consolidate your cards yourself. Read the new card agreement carefully. If you think you might be forced to make a late payment even once, reconsider. Doing so can send your interest rate skyrocketing and you could end up in deeper debt than before as penalty interest takes hold.
TIP 4: Once you’ve consolidated your credit cards, stop using the ones that have a zero balance. Use cash only and do your very best not to add any new credit debt. If you don’t do this, you’ll end up with the consolidation to pay plus new debts on other cards.
Stop using credit cards is one of the best tips on credit card consolidation you can get.