Self Debt Consolidation

Since credit card debt is the debt that gets most people into trouble due to the outrageously high interest rates charged, taking some time to reduce the costs associated with them is in order. The goal here is to consolidate all your current credit card debts into as few as possible. It’s time to take a hard look at the different credit cards you currently possess, taking special care to note the interest rate each charges. Credit card interest rates vary widely and the goal will be to move as much credit card debt as possible to the card(s) with the lowest interest rate(s). You will need to call the credit card company with the lowest rate and ask that the balance(s) from the higher interest credit cards be transferred.

If you find that the interest rates being offered by the credit cards you possess are all in the 18% + interest rate range, it’s time to make a call to each of your credit card companies and ask them if they will be willing to lower the rate. A polite explanation that you will transfer the entire balance to a competing credit card and close your existing account if you can’t receive a better rate should help in the negotiating.

Another option is to take advantage of the promotional offers that many banks use to attract new customers. They will offer a low introductory interest rate (sometime as low as 0%) for a set number of months if you transfer your credit card balance to their card. The issue to be careful about is knowing what the credit card interest rate jumps to once the introductory rate ends. If that rate is still lower than your current credit card rates, then this option is probably well worth while. (NOTE: credit card companies have caught onto people who simply jump from credit card to credit card once the introductory rate ends. To combat this, many have written into the offers that if the balance is moved again to another card within a certain period – usually 12 months – the normal, higher interest rate will be retroactively applied to all outstanding balances).

Being able to move these balances, however, will be dependent on not having all your credit cards maxed out to their limits and having a credit report that leads the credit card companies to believe you will eventually be able to pay off all the balances. If all the above efforts fail and you have no savings, it’s time to skip ahead to step #8. If you have managed to consolidate your balances to a few of the cards and lowered your interest rates on the cards which still have balances, you have saved quite a bit of money in interest charges, but you still aren’t done.

While the balances may have been consolidated, you still have the credit cards. Keeping those cards is like placing candy in your pockets and will lead to even more trouble down the road unless you get rid of them. It’s time to take out a pair of scissors and cut those babies up. Not just the ones that no longer have balances, but all the cards except the one with the lowest interest rate (there is rarely a good reason to have more than one credit card even for those with no debt). You now have a single credit card, your monthly payments on the same amount of credit card debt have been lowered, and you passed yet another large test on your commitment of getting out of debt. Onto the next step…

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