If you're not careful, credit-card debt can eat you alive. Exorbitant rates make it impossible to meet even the basic monthly payments. If you've rung up huge debts on a number of credit cards, consider consolidating the payments. With just a single monthly payment, you can reduce your debt much more readily and keep better track of the money you owe. A few simple tips make the process much more effective and will get you out of debt faster.
Check Interest Rates
When consolidating credit-card debt, carefully examine the interest rates of each one. Lower rates save you money, though if a given card offers a particularly low balance-transfer rate, you may want to consider it as well. You can apply the money you save on lowered interest toward the principle of your debt, getting you out of the hole more quickly. Some credit cards even offer 0 percent introductory rates, which can't be beat provided you pay close attention to the specific terms and know when the rates are going to shoot up again.
Stop Spending
Once you've shifted your debt to a single card, cut up all of your other credit cards. You can't get out of debt if you immediately start racking up new charges, and consolidation won't work if your payments don't go down. Spare yourself the temptation and cancel your cards as soon as they're paid off. Along those lines, make a harsh assessment of the charges you make on your cards and work on reducing the number of things you buy. Cut out anything that isn't absolutely necessary, and start paying for things with cash rather than with your cards. It may hurt in the short term, but you'll see the difference when the bill arrives.
Take Out a Loan
If your credit-card interest rates are eating you alive, consolidate them through other means. If you own your own house, think about a home-equity loan or a restructured mortgage. Banks may also offer a personal loan for those without home equity. Interest rates on such loans are often lower than the cards, and set terms mean you know how much you need to contribute every month. You can also establish automatic payments through your banks so that the money is automatically deducted from your account every month. When seeking a loan, make sure you go through a reputable institution with a solid history and good terms. Fly-by-night institutions offering quick-fix loans often end up being worse than the credit cards themselves.
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