Consolidate credit card debt
Should I consolidate my
credit card debt?
If they all have the same interest rate, there's
no real need to consolidate these balances. Think about it. If you
have $2,000 outstanding on two credit cards at 16.9 percent, what's
the savings in having the balance on one card at the same interest
Most credit card agreements have higher interest rates for cash
advances and will also charge a fee for the transaction, too, so
it's not going to be a less-expensive approach to paying down your
credit card debt.
People typically look to debt consolidation
to reduce their interest rate or extend the term of the loan. Credit
card debt is open-ended or revolving credit, so shifting balances
from one card to another isn't going to extend the loan term. You've
stated that all of the credit cards are at the same interest rate,
so that's not a reason to move balances.
About the only reason for you to consolidate these balances is
if one credit card calculated the minimum payment as a lower percentage
of the outstanding balance then the other and you were trying to
free up some funds in your monthly budget. You're trying to pay
things off, so you should be paying more than the minimum payment.
A balance transfer to another credit card at a lower interest rate
could help you pay down your balances faster because more of your
monthly payment would be going toward principal instead of finance
But the credit card companies are getting pretty
sophisticated in putting up barriers so cardholders don't keep moving
on to the next teaser rate, so make sure you understand the credit
terms and balance transfer charges if you decide to take this approach.
Bankrate.com has a feature
that can help you decide if moving balances is
the right decision for you.