Credit Card Debt Consolidation, put-simply
What is Credit Card Debt Consolidation? |
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Credit Card Debt Consolidation involves establishing a new Credit Card to
pay off several existing Credit Cards. It is, put simply, the process of
rolling all of ones debts into one new consolidated payment.
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Often, individuals with multiple Credit Cards find themselves paying very
high interest rates. In an effort to attract new customers, Credit Card issuers (Banks, Visa,
Master Card, and American Express) often offer lower interest rates on new
Credit Cards. By applying for a new credit card and consolidating several
debts into one, it is possible to dramatically reduce the monthly interest
rates paid. Lowering your interest rates lowers your monthly payments
For example: If someone owed $1,000 on 4 different credit cards,
$1,000 owed on a Master Card with 18% interest
$1,000 owed on a Visa with 16.5% interest
$1,000 owed on a American Express with 22% interest
$1,000 owed on a Discover Card with 18% interest
It is possible to take all 4 of these debts and consolidate them into a
single new credit card. If the new Credit Card had a lower interest rate of
11.5% (even if this rate was only good for one year) consolidating these 4
credit cards into one single payment with lower interest rates would reduce
the monthly amount of interest paid. It also provides the added convenience
of having to pay one, easy to manage payment, rather than several.
The practice of consolidating credit card debt is widely considered a sound
financial strategy for people trying to manage their debt problems.
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