Consolidating your credit card debts

If you are the kind of person that uses the credit card to make purchases and then repays the balance at the end of each month then there is no problem, as you get to enjoy the convenience of a credit card without the financial implications of being charged high levels of interest – no interest is charged if you repay the balance in full within the specified period.

However, for many people credit card spending isn’t quite that simple. It seems to take next to no time to actually accrue a huge balance on the card, and it seems to take an eternity to actually repay it. With a large chunk of your monthly repayment being swallowed up in interest you could find that you are barely impacting on your principal balance if you are only able to make small repayments on your card each month.

Various debt management solutions

There are a number of solutions available to those looking to consolidate their credit card debts in order to reduce repayments and interest and make repayment of the debts more manageable. If you have a number of credit cards you are most likely paying a lot of interest as well as having to deal with making a number of repayments each month. By consolidating these you could cut your repayments, enjoy easier budgeting, and reduce the interest that you pay.

One of the solutions available for those looking to consolidate their credit card debts is through a debt consolidation loan, which can be used to consolidate a variety of other debts in addition to credit cards, such as catalogues, store cares, and other forms of credit. Another solution available is by transferring the balance of your credit cards to a 0% balance transfer credit card, which will enable you to benefit from a set interest free period to try and clear more of your balance.

There are a number of benefits and drawbacks to using the 0% balance transfer credit card. Some of the benefits include:

1. Being able to transfer all of your credit card balances onto one card, thus making financial management and budgeting easier and more convenient

2. Benefiting from an interest free period during which time you can make more of an impact on the principle balance of your credit card debt, rather than watching large chunks of your repayments go towards interest payments

3. Enjoying a choice of 0% balance transfer cards from a range of lenders and financial institutes, giving you more choice and a better chance of finding the right card for your needs

4. Some of the things to look out for and bear in mind include:

5. Some 0% balance transfer credit cards charge administration fees and annual fees

6. You will usually need a good credit rating in order to qualify for a credit card that offers this type of facility

7. You will need to be able to get a credit limit that enables you to transfer all of your other credit card balances on to the card in order to cut back on the amount of interest you pay

8. If you find it hard to stop spending on credit cards, you will still have the temptation of a card if you use this method to consolidate your other credit card debts

If you do plan to transfer your existing credit card balances on to a 0% balance transfer card you should make sure you compare the cards on offer, and find a fee-free transfer card that will not charge you for the privilege of transferring your balance. Also, compare areas such as the period of interest free credit offered, as the longer this is the more time you have to make a real impact on your credit card balance.

Reducing your credit card spending

For those with willpower curbing spending on a credit card may not be a problem, but for many people the temptation can be all too much and before you know it you’ve suddenly accrued a huge balance on your credit card and are faced with the prospect of repaying it all – and at very high rates of interest. There are a few ways to try and curb your credit card expenditure, and these could help to stop the debts mounting up on your card.

• Keep your card somewhere safe for emergencies or to take with you on vacation but don’t carry it around with you all day everyday, as this can help to keep your usage of the card down

• Set up a direct debit or standing order with your bank so that a set amount – as much as you can afford each month – is repaid on the credit card automatically, keeping the balance lower

• Keep a close eye on your credit card expenditure and monitor how much you are spending so that you don’t go over your limit and incur hefty charges – and to try and control your credit card spending a little more

• If you have a number of credit cards with balances, transfer the balances to a 0% interest balance transfer card If you think that you might use the available credit on the card as quickly as you are paying it off, simply cut up the card and dispose of it safely so that the temptation is not there and continue making the repayments on your transferred balances at 0% interest for the specified period.

• Consider using a debt consolidation loan in order to pay off your credit card debts, and once this is done cut up and safely dispose of your credit cards to eliminate temptation.

Further reading: Finding the right person for credit counseling and what to look at when examining debt counselors and organizations.