One Simple Way of Consolidating Credit Card Debt

Debt is something that has to be managed, and can basically get out of control if you are not cautious. Credit card debt in particular is among the most burdensome financial issues for consumers today, and consequently millions of credit card customers are looking for ways of consolidating credit card debt as a way to better manage their financial duties. While it is important to receive a lovely handle on your credit card accounts and make positive that you haven't extended yourself beyond your means, consolidating credit card debt itself can sometimes generate even more financial hardship in case you don't take great care in the way you approach this significant financial issue.

A very common form for consolidating credit card debt is to transfer the balances of your higher rate cards to a credit card that has a lower annual rate of interest. For example, you may have or credit cards with balances of a few hundred (or few thousand) dollars each, and those cards may carryover an annual rate of interest of 17 percent, 18 percent, twenty percent, or even more. Obviously you ought to be able to save a significant amount of funds each year in interest by moving those balances to a card that carries a lower rate of interest. For example, you may be able to transfer the balances of those higher-rate cards to a different card that carries only a 13.5 percent rate of interest. Even on a balance that is currently being charged only a few percentage points higher, such as 17 percent, you will save significant actual dollars -- definitely to think about this as a process for consolidating credit card debt.

But hold on second. Before you immediately transfer that balance, there's lots of pitfalls that you may overlook when consolidating credit card debt in this fashion, and it is important to think about them before you move your funds:

The "teaser" rate:
Some credit cards offering lower rates of interest may only offer them as a "teaser" or introductory rate. That means the credit card's annual percentage rate may increase at some point in the future, when the teaser rate expires. You ought to check carefully to make positive that you understand exactly what the rate will be in the future as you pay down the balance you transferred from the original card.

The "empty card" syndrome:

Consolidating credit card debt by moving balances to a lower-rate credit card is feasible way to economize on interest, but beware the hazardous pitfalls of teaser rates and empty card syndrome. Credit and debt must be managed wisely, or you may find yourself in serious financial trouble.

If it turns out that consolidating credit card debt by moving the existing balances to a lower-rate card will work well for you, then you require to make positive you have a plan to deal with the higher-rate card that will suddenly have a zero balance. often people can fall victim to the "empty card" syndrome and find themselves charging things again on that newly empty card, because it's no balance and it offers a convenient payment process. In case you fall victim to this mentality, then you may find yourself right back where you started in no time. In lieu, put that card away in a place where you are not likely to make use of it, unless faced with a serious emergency. Otherwise, your decision to attempt consolidating credit card debt and saving yourself some funds in interest may come back to haunt you.