How Do You Manage Your Credit Card Debt?
Are you currently juggling several credit cards, each with their own burdensome debt? Sometimes when we manage multiple debts, it can feel like you’re constantly facing an uphill battle: each month you make payments here and there, but you never seem to get anywhere.
Consolidating your credit card debts is often a great solution to help you streamline your accounts and pay off your balances more quickly and efficiently.
There are many plus points to credit card debt consolidation. Firstly are the interest savings; when a lender is trying to gain your time as a new customer, they will usually incentivise an attractive interest rate to get your business. Secondly, consolidating your debts will simplify your budget. You’ll not find the need to make payments on four or five accounts at the end of the month – you simply make one payment on one account, saving you stress, time and paperwork.
The primary step to consolidate credit card debt is to check all of your credit card accounts in detail, and develop a genuine and honest knowledge of your overall financial status.
Work out how much your overall debt is; how much you need to pay in minimum payments across all of your accounts each month; and how much you can afford to repay on a monthly basis.
Now, it’s time to hit the research trail. Many banks offer low or no interest credit card rates for new customers, so investigate all of the options in the market, and draw up a shortlist of the best three candidates. These might even be with banks where you are already a customer.
Armed with all of this information, your next move is to contact each of your credit card providers and explain your intention to consolidate your credit card debt. They may offer you a lower interest rate in order to keep your business, so make sure you ask them whether they will can negotiate with you to transfer your other credit card accounts to them.
If none of your current banks are willing to negotiate, then it’d be worthwhile applying to a bank that offers the best deal. Once approved, your new bank will arrange the transfer of your old credit card balances to your new credit card account.
Lastly, once your credit cards have been consolidated, you must significantly lower or cancel the credit limits on your existing credit card accounts. This is where many people can fall into the trap: they consolidate their accounts into one credit card account, and then accrue new debts on their previous credit card accounts. This can result in an even messier credit card dilemma, so avoid the temptation, and cancel your cards ASAP – if not sooner!
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