Credit card consolidation refers to the consolidation of a number of credit card loans into one single loan. This can be done with the help of a number of methods. The primary methods are balance transfers and credit card consolidation loans.
About Credit Card Consolidation
In today’s world, a large number of people are suffering from outstanding credit card debts. When the credit card debts spiral up and the interest and fees are higher than the minimum monthly payment, people find it hard to come out from credit card debt. Nevertheless, there are a number of solutions available to do that.
The easiest solution to this type of difficulties is to repay the balances of credit card debts every month. Of course, this is a precautionary step and this ensures that one does not fall into the trap of credit card debt.
However, everyone is not capable of doing that. If a person already has a substantial amount of credit card debt and is not able to repay the loan, credit card consolidation might be the answer to his problems.
Options of Credit Card Consolidation
The options of Credit Card Consolidation can be categorized into the following segments:
Credit Card Consolidation Loan
A credit card consolidation loan has the advantages of consolidating all the outstanding debts of the credit cards carrying high rates of interest to one single credit card debt with a smaller amount of payment and smaller rate of interest. Under this arrangement, the debtors have the option to make a single payment to the credit consolidation agency and this agency reciprocally directs the payments towards the creditors on behalf of the debtors.
Transfers and Introductory APR Rates
Under this method, the outstanding balances of the credit cards carrying high rates of interest are transferred to other credit cards, which are carrying lower rates of interest. The balance transfer methods have become highly popular among a number of people.
Nevertheless, the debtors should be cautious about a small number of credit cards, which provide the debtors with an introductory APR (Annual Percentage Rate). This suggests that the rate of interest would be low for a stipulated period of time and will increase thereafter. So it is advisable that the debtors should try to repay the loan earlier than the low interest phase is completed.
Last Updated on : 9th July 2013