Low Interest Credit Card Consolidation Help

Consolidating your credit card debt to one low-interest credit card can save you hundreds, if not thousands, of dollars in interest. All you have to do is open a 0 percent introductory or other low-rate credit card and transfer your other debts over. While, of course, you need to qualify for an ample spending limit to allow this, relief is almost immediate. However, there are some important things to consider before using low interest credit card consolidation.

Introductory Period

First, remember that the introductory period is only temporary; that 0 percent, or single digit, APR won't last forever. In fact, most introductory periods last for just 12 months. It is important that you understand when that introductory period will end and how much your interest rate will be afterward. After the introductory period, your interest rate will typically increase dramatically, especially if your credit is not excellent to begin with. You have to be prepared to pay off your debt during the introductory period, or be prepared to deal with it once the introductory period ends.

Minimum Payments

In order to take full advantage of low-interest credit card consolidation, you will also have to make sure that you are paying far more than the minimum payment your credit card company requires. If you are paying only the minimum payment, it could take you more than 90 years to pay off your credit card debt, provided you don't have any new charges.

Penalties

Further, the special introductory rate may only hold under specific circumstances. If you make a late payment, your interest rate could increase significantly even if you are still in your introductory period. It could only take one late payment to make this happen. Moreover, keep an eye out for hidden fees and charges that may increase your costs beyond what you already pay in interest.

Credit Score Consequences

Low-interest credit card consolidation can have important consequences with regard to your credit score. For one, when you use a low-interest credit card to consolidate your debt, you increase your credit utilization rate. This rate is used in calculating your credit score; it refers to the ratio of your credit card balance to your spending limit. The higher your credit utilization rate, the lower your credit score. You will end up with an even lower credit score if you keep opening a new credit card every few months to take advantage of a low introductory rate.