You probably get flooded by ads everyday for credit card debt consolidation deals. Whether on TV, mail or email, they are out there and they want you. Let's face it, if you are a spender and use credit cards, then you are in their target market. But before you run for the hills from these ads because of their slick look, there are some benefits that you can gain from credit card debt consolidation if you choose wisely. In case you are unsure, what I mean by credit card debt consolidation is combining your current card balances into one account, which is usually a brand new card, although you could consolidate onto a card you already have. The main benefit of credit card debt consolidation is realised in terms of APR reduction (and hence reduction in credit card debt growth rate). This is touted as the most important benefit (and sometimes the sole benefit) from credit card debt consolidation. However, credit card debt consolidation comes with few more benefits as well. Some of these credit card debt consolidation benefits are widely publicised by the credit card suppliers and some not so much: Initial APR: This is usually what attracts most people. The offer is that you pay something like 0% for say 9 months, after which you start paying the standard APR. Try to get more months from the sales rep and this could really springboard your debt payoff program. Standard APR: If you are going to take more than the initial 6 to 9 months to pay off your credit card debt, then you need to look carefully at this rate. Clearly the credit card company hopes you will take a long time to pay. That is where they make their money, in addition to you spending more with your card, which I hope you don't do. 0% on Purchases: Try not to get excited about this. Your goal is to get your debt paid off remember? So you should not be looking to go on a shopping spree. But if you did have an emergency purchase that you absolutely needed, this might be a way to get it. Easy Management: One bill, one balance. That is one nice thing about consolidating. This makes it easier to track how you are doing on your debt reduction and management of your finances. Other benefits: Credit card debt consolidation might bring you some more benefits in terms of rebates, discounts and reward points, especially if you move to a co-branded card as part of credit card debt consolidation. So what do you do when you get your debts consolidated and your new card arrives in the mail? Hopefully you have cut up your other cards that now have zero balances. Consider doing that with this one too. Or at least put it where it takes an effort to get it. And that means not in your wallet. Use the consolidation as a tool to get out of debt and you will have made a good choice. Don't use it to dig yourself deeper into credit card debt.
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