Credit cards are by far the biggest reason so many people are in debt these days. They are so easy to get and even easier to abuse. The high interest rates and extreme penalties make them a nemesis to a good financial standing. For this reason credit card consolidation is an important thing to understand.

One of the most popular ways to consolidate your credit cards are to transfer the combined balances of the cards you have now on to a new card. Another way to consolidate your credit card debts is to apply for a consolidation loan.

If transferring the balances to a new card it is important to be sure that the new card has a tolerable interest rate. There are cards that offer zero percent interest for an introductory time period which is great. However, after the introduction period an interest rate will be applied so it would be a good idea to know what this rate will be. There are many of these kinds of credit card offers so you should do a little shopping around if possible.

A debt consolidation loan is another great way to get rid of your multiple monthly credit card bill payments. With this type of loan you may be able to negotiate some of the terms with the lender such as how long the loan will last. The longer the loan lasts the less your monthly payments will be.

No matter which of these two routes you decide to take, you really need to stop using the cards you have paid off via the consolidation loan. Once you pay them off by either transferring the balances to another card or by way of the personal loan you should cut them up. If you continue to use them you will be making your situation much worse. You may need to keep one of your cards in order to do the usual things such as making reservations or making online purchases. Still, you will need to keep its balance clear if you intend to get out of debt this century.

You should consider prepaid credit cards as well. These cards require you to send in an amount of money first creating a balance from which the card draws. All your purchases are then deducted from the card’s balance. When the card balance hits zero, your done, the card will no longer be valid until you send in more cash. This is a great solution for children as well as those of us who may have spending “issues.”

Credit card consolidation can save you hundreds if not thousands of dollars if done properly and completed without incident. By taking on this task yourself and foregoing a third party intervention, your credit score will be much better off as well. As with any type of financial decision, shop around for the best offers, read the fine print and make all necessary adjustments to your lifestyle and spending habits to accomplish this most important task.

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