Debt Consolidation Credit Cards

You can use credit cards to consolidate debt. When you do this, you open yourself up to new opportunities and to significant savings in the end. According to the Federal Reserve Bank of Boston, the average amount of credit card debt in each American household is $15,799, as of July of 2011. That is a great deal of debt to have, and it equates to numerous Americans paying too much to borrow. The good news is that you can work your way out of debt by making a few wise decisions.

A New Credit Card to Consolidate Debt

Most Americans have numerous credit cards. Each account may have its own interest rate. Some will be higher than others will. What if you could pay off all of your individual accounts and have just one, lower monthly payment to make? That is exactly what you can do. Some lenders will help you to do this through debt consolidation credit cards. Here is what you need to know.

Low Interest and No Interest

Some of the best debt consolidation credit cards provide you with a very low or even no interest rate for a limited amount of time. For example, if you sign up for a new line of credit through the company, you may qualify for 12 months of zero APR on your balance transfers. If that is the case, consider doing the following.

  • Pay off the smaller credit cards you have by using your new line of credit.
  • By transferring your debt from your high interest rate credit cards to the zero percent APR card, you stop interest accumulating on it. That saves you money.
  • Work to pay off the debt over the 12-month period. That way, you do not have to pay anything more than you borrowed - no interest.

This is one of the best ways to consolidate your debt because you are not taking on a costly loan or borrowing against your home. In most cases, you can qualify as long as you have steady employment and income, as well as a good or better credit score.

Debt Consolidation Credit Cards and Fees

When choosing a credit card for debt consolidation, be sure to compare options. Compare credit cards in several ways.

  • Does the company offer balance transfers for you? If not, you may be unable to use the card as a debt consolidation tool.
  • Is there a fee for balance transfers? If so, this may make it too expensive to do this depending on the amount of debt you have.
  • Is the zero percent APR (or other low interest rate offer) applicable to balance transfers? If not, you may find that the interest rate is higher.
  • What is the interest rate after the introductory period? What is important here is to ensure that the offer does not have a very high interest rate after the intro offer. Otherwise, if you do not quite pay off the transfer prior to the end of the intro period, you could end up owning a significant amount.
  • Does the card have other fees? Know what the fees are before you actually accept the card. It is critical to know what you can expect from the card.

Take the time to compare credit cards. Find out which card can offer you the best terms. A debt consolidation credit card can help you to pay off your debt faster and for less than paying it off as you are. However, you do have to choose the right card.

Debt Recovery and Bad Credit Debt Consolidation

If you have bad credit, finding debt consolidation credit cards can be a bit harder. However, some lenders are willing to extend credit to you if they can pay off and close off the cards you currently have. You may wish to talk to specific lenders about this ability. For many people, it is very possible to get a debt consolidation credit card.

Once you get this card, you can then work on making payments on the new credit card on time each month. Over time, this builds your credit. Keep making payments on time and you may find that this is the ideal way for you to get a better credit score.