Those people who are with debt are often get to hear these suggestions ‘Consolidate credit card and debt’. Hence, exactly what does that ‘Consolidate credit card and debt’ mean? Well, pretty simply, ‘Consolidate credit card and debt’ means consolidating the debt on various credit cards directly into a single credit card. This consolidation can be done either through a low interest bank loan or by transferring balance to a new credit card
What exactly should you do while you are planning to consolidate credit cards? Certainly, the important thing to look for is the APR or the annual percentage rate. Whichever method you follow to consolidate credit cards, APR will always be the key; in fact, you could possibly say that it’s the sole requirements to look for. Hence, if you are using a bank loan to consolidate credit card and debt, the rate of interest on the bank loan should be lower than the APR of the credit cards whose debt you are consolidating. Also, if you are moving to another credit card, you must ensure that the APR of the new credit card is lower than the credit cards whose debt you are consolidating. Having said that, there is a catch that you should be aware when laying a plan to consolidate credit card debt.
The APR rates advertised by most credit card providers are the short term APR rates which can be meant to bring you to consolidate credit card and debt with them. By means of short term we suggest APR rates which will applicable only for an preliminary period of less than 12 months or several other period after which the APR rates increase. When you go on to consolidate credit card and debt with one of these credit card providers, they will offer you a lesser APR for the first 6-12 months; and a much higher APR and after that. You should verify what this higher APR rate is. Your final decision to consolidate credit card and debt will be successful only when the new APR rate is lower than or equal to the APR on your current credit card. You can check with your current credit card provider to see if he could lower your APR .
Before you decide to move on to consolidate credit card debt you should know that consolidating credit card and debt will probably be beneficial only if you promise to observe and follow disciplined method of credit card usage i.e. controlled spending and regular/timely payment of credit card dues.