The basics of Credit Card Consolidation
Credit card consolidation is a simple way to get your numerous credit cards and their accounts under the same roof and within your control again. When you open your wallet and see five, ten or in some people’s cases 15 credit cards staring back at you, you need to take a step back and evaluate your credit situation. You are running balances in several accounts, paying interest everywhere at different and sometime variable rates, and run the risk of missing a payment on any one of these card balances and the financial repercussions that come with it.
Reason #1: Lower interest rate
The number one reason to consolidate your credit cards into a single loan payment, hands down, is for a lower interest rate. Take a moment and look at the different interest rates you are being subjected to by your many creditors. Imagine taking all those numbers and putting them under a single umbrella interest rate of just a few percentage points. Not only will you be saving money every month, you will be paying off the principle on your credit card loans; the key to ever getting out from underneath them.
Reason #2: Universal Default on Loans
Universal default is a series of protections enacted to protect the credit card companies from debtors who are becoming potentially more financially risky. Universal default is a pricing guideline that allows your credit cards to substantially increase what they charge you and how much you owe, even your interest rate. Great for the credit companies, but extremely costly for the average consumer if you get trapped by them. They can include late payments, even once, on an open credit line. Going over your credit limit. Having to much debt overall, regardless of to whom you owe it to. Having too many credit inquires. Even opening a new mortgage or car loan. Universal default is tricky and even the most conscientous of credit card users can find themselves ensnarled in it. Getting a credit card consolidation loan can help you avoid being subjected to these ugly credit card pitfalls.
Reason #3: Too many credit cards too many payments
If you are making too many payments and have to many cards, you are going to fall into a credit trap and start defaulting on payments, which can lead to late fees and universal default. The dilemma you are faced with is, ok I have these cards and outstanding balances, what now? What you need now is too simplify. Get a credit card consolidation loan and wipe the slate clean. Start again fresh with only a card or two running only zero or near zero interest rates and stick to them.