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credit card debt
consolidating debt
careful consideration
amount of money
thousand dollars
pitfalls
short time
debts
Consolidating Credit Card Debt – A Simple Way To Save Money?
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Consolidating Credit Card Debt – A Simple Way To Save Money?

Debt is something that has to be properly managed or it can quickly spiral out of control. Credit card debt is a huge burden on consumers these days. There are millions of people looking for ways to consolidate their credit card debt to try and help get their finances under control.

It is important to get your credit card and other debts controlled, but consolidating credit card debt can create even more issues if you don’t do it with some careful consideration.

A common way to consolidate debt is to take the higher rate cards you have and ‘roll the debt’ to a new card with a lower interest rate.

For example, you have three cards with a few thousand dollars on each card. These cards might have 17,18, or 20% interest fees. It makes sense that if you move these balances to a card charging 13% interest you would save a considerable amount of money. This certainly seems a great way of consolidating credit card debt.

But there are a couple of pitfalls that you could encounter when consolidating debt in this way. So let’s consider them for a second:

The lower rate may be a ‘teaser rate’ that is only available for a short time. What is the rate going to be after that? If six months from now the rate is going to go up to something crazy like 21 or 24% is that going to be saving you money in the long run? Read all the fine print so you understand exactly what you’re getting yourself into.

Don’t fall into the ‘empty card’ trap. You have decided the balance transfer was a great deal! Now that you moved the balances from your cards, you suddenly have these wonderful cards with no balance on them. Very often people will find themselves charging things on these empty cards because it’s an easy way to pay for something. Before you know it, you are right back where you started, except you now have more debt than you originally did.

You can avoid falling into this debt pit by either putting the cards away so that they aren’t easy to access, or better yet cut them up, so you won’t be tempted to use them.

Consolidating your credit card debt by transferring the balances you owe to a lower rate card can be a simple way to save some of the money you pay out. Just be wary of the ‘teaser’ rates and don’t let yourself become a victim of the ‘empty card’ trap. To keep yourself out of serious financial difficulties you need to be wise with managing your credit and your debt.


Street Talk

PaulT  

A great article! I ask my clients to think of credit cards as "Debt" cards, this keeps things in perspective. They are a great tool for facilitating affordable purchases but must never be used for emergencies.

Reply
  about 7 years ago

Another nice one, I am pinning these to Pinterest

Reply
  about 8 years ago

Did you re do your site?

Reply
  about 8 years ago

A little bit. Always tweaking to try to make it better.

  
  about 8 years ago

thanks Shawn! Appreciate it!

Reply
  about 8 years ago

Good article that'll help people from getting into serious financial difficulties!

Reply
  about 8 years ago

I hope so Cynthia! It is really stressful to feel like you are buried in debt.

Reply
  about 8 years ago

Indeed it is! We've all been there at some point.

  
  about 8 years ago

Another nice read. Must really like your niche .. well done:)

Reply
  about 8 years ago

Thanks Shawn! And yes I do. :)

Reply
  about 8 years ago
Golfspice  

Well written and useful article. Credit cards are a useful tool if properly managed and paid off each month, but there is a real sting in the tail through steep interest charges if you do not. Providing credit and loans is big business nowadays because there are big profits for the companies doing the lending!

Reply
  about 8 years ago

Yes they are very handy for emergencies or when you are traveling. Too many people don't use them well and get themselves in so much trouble!

Reply
  about 8 years ago

I have had zero credit card debt for over 10 years. When i was younger I made the mistakes many do and charged up food and perishable things that took forever to pay off with nothing to show for it. never again I promised myself, so far so good! L) Great advice here.

Reply
  about 8 years ago

Thanks a lot Shawn! That's great that you don't have that kind of debt hanging over you. It's a mess!

Reply
  about 8 years ago
Joan S  

Credit cards scare the wits out of me. I've put them away.

Reply
  about 8 years ago

Yeah me too. Cut mine up years ago.

Reply
  about 8 years ago

Nice read .. fiscal health is extremely important, but most people wont address.

Reply
  about 8 years ago

Thanks Wayne!

Reply
  about 8 years ago
Linda14  

Great article. It's amazing how many people get in over their heads with credit cards. It's not the free money some people think it is.

Reply
  about 8 years ago

Learned that the hard way when I was younger. It's a lot more fun spending than paying it off! Thanks for the read Linda!

Reply
  about 8 years ago
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