Your credit card debt can easily get out of control quickly. How do I know? Because I have been down that road myself. The good news is that your debt can be managed much better than it has been so far. The most burdensomes type of debt for consumers today is credit card debt, with student loans coming in second. Millions of credit card customers are searching for the means to better manage their financial responsibilities. The most frequent method of debt management is found through credit card debt consolidation.
Credit card debt consolidation can seem like a quick fix at first. Longer term, it can create more financial stress if you do not use a careful and calculated approach. One common solution to consolidate credit card debt is by transferring your high interest rate card balances to a credit card that has a lower interest rate. As an example, if you have several credit cards that have a balance of $5000 and a rate of 22.99% percent or more, you could save a huge amount of money by simply moving those higher balances to a card that has a lower interest rate. Ideally, you should find a rate of 0%.
With a credit card balance that is being charged several points higher you would see a significant savings by transferring your high balance to a new, lower interest rate card. This is one positive method to consolidate credit card debt.
But before you go down that road, wait just one minute. There are a number of “gotchas” that need to be addressed before considering this type of credit card debt consolidation. Before you begin transferring any credit card balances, please consider the following financial pitfalls.
- The new card that you are considering may be offering a teaser rate that will expire and become a higher interest rate later on.
- Read the “fine print” and understand the terms of the new card so that you are aware of exactly what the higher rate will be in the future. Do not suffer any set backs to your debt consolidation plan by getting caught off guard.
- Do not become a victim of the “empty card” syndrome. If you have decided that moving your high rate balance to a lower interest rate card will help you consolidate your credit card debt, make sure you have a plan for that new zero balance card. Many people find themselves back at square one and in even deeper debt by using their zero balance card because the balance has been cleared off.
In other words, out of sight is out of mind. If you don’t see the credit card, you will not use the card; therefore you will not defeat the purpose of consolidating your credit card debt in the first place. If you do decide to consolidate credit card debt by moving a high balance to a lower interest rate card, be aware of the teaser rates on the new credit card. And always remember, credit card debt must be managed responsibly.