Debt Consolidation
"I wish I could say I was the one who came up with the
smart idea of consolidating debt on a cheap credit card,
and then switching before the interest rate jumps."
- Ilyce R. Glink, author of
100 Questions You Should Ask About Your Finances
Consolidating your debt is basically the strategy of taking
all that you owe on credit cards and transferring it onto
one low interest rate, high credit limit card. Often you can
utilize a low "teaser" interest rate to get started, but you'll
need to alter your strategy if you haven't significantly paid
down the debt before the rate jumps up.
The following guidelines are designed to help you make the
best consolidation moves:
- Consolidate your credit card debts onto the lowest-rate
card you can find by using balance transfer checks.
- Find a card that doesn't charge an additional fee (usually
a percentage of the transfer up to a maximum amount) to
make balance transfers.
- Find a card that guarantees a low interest rate for at
least a year.
- Use the amount you save each month on minimum requirements
to help pay down your debt.
- Pay half of your credit card payment twice a month instead
of one large sum once a month (you'll save on interest and
the excess will be applied to your principal).
- Transfer the balance remaining on the card to a new lower-rate
card before the teaser rate jumps back up.
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