Credit card consolidation means that a person combines several credit card debts into one. Instead of issuing multiple monthly payments, the person only makes one single payment to creditors. Some people find that this makes it easier for them to get out of debt quickly.
Considerations
For some people, debt consolidation is a good idea. Whether or not a person should consolidate their debt depends on their financial situation. When an individual has lots of debts and high interest rates, credit card consolidation might be a good idea.
Lower Interest Rate
One benefit to credit card consolidation is lower interest rates. When a person consolidates high annual percentage rate credit cards, they may get a lower interest rate.
Second Mortgage
An individual may be able to consolidate their credit cards through a second mortgage. This can also be done by a home equity line of credit. However, a person must be aware that mortgage consolidation loans can add up quickly.
Money Management
In order for a person to obtain good financial health they must learn how to budget and save money, according to Dave Ramsey. According to Ramsey's website, 78% of the people who consolidate credit card debt eventually fall into debt again. This is often due to improper money management.
Credit Counseling
According to Care One Credit, a person that is considering credit card consolidation should also consider credit counseling. Credit counselors can help a person create a debt relief to plan to reduce interest rates on late fees and lower monthly payments.
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