Should I consolidate my credit card debt?

Consumers who have multiple credit cards may be looking to consolidate their debt to make their payments more manageable. There are some situations where consolidating makes sense and others where it isn’t the right choice.

The absolute first step in figuring out whether consolidating your credit cards is the right choice for you is to take all of your credit card statements and examine them in detail. Make note of how much you owe and the annual interest rate you are being charged. Armed with this information, you can start to look at your options.

Please continue reading to get information about the options so that you can make the right choice for you and then consider taking a look at our free tool to compare credit cards and find the credit card that is best for your needs.

When Not to Consolidate Your Credit Card Debt

If your credit cards all have similar interest rates on unpaid balances, then it doesn’t make sense for you to consolidate the balances onto one card. You won’t be saving any money in interest by doing so. You also need to consider whether a balance transfer will be considered the same as getting a cash advance on your credit card.

Most credit card providers charge a higher interest rate for a cash advance, and they may charge a fee as well. If you are going to lose the grace period before interest starts to run on the balance transfer, keep in mind that you will be paying interest from the day the transaction is completed until the amount is paid in full.

Since credit cards give consumers access to a revolving source of credit, moving outstanding balances from one card to another with a similar rate of interest doesn’t give you more time to pay off the loan or get a lower minimum payment. In this situation, you may be better off looking at other options, such as taking out a home equity loan or a line of credit with a lower interest rate to help you deal with your debt.

When Consolidating Credit Card Debt Makes Sense

If your examination of your credit cards indicates that you have cards with varying rates of interest, then consolidating your debt onto the card with the lowest interest rate may be the right choice for you. Assuming you have enough room on your card limit to do so, contact the credit card company to find out how you can transfer the balance on your higher-interest card onto the one with the lower rate.

Another advantage to consolidating your credit card debt is that it makes your life simple. Rather than having to remember to pay multiple cards each month, you only need to make one payment. When you are considering the right move for you, do factor the convenience of making a single payment into the mix. This reason alone may not be enough to tip the scales in favor of debt consolidation, but it does make this option more attractive. You can find out about credit card rates by checking out the free credit card Chaser tool on this page.

Getting Help With a Debt Consolidation

If you want to consolidate debt but moving your existing credit card balances to a card with a lower rate isn’t the right choice for you, there are other options. If you want to look after your debt independently, you can sit down with a pen and paper or use specialized software to help you come up with a budget that will allow you to meet your financial obligations while paying down your debt over time.

You can also approach your bank or another lender to ask about taking out a debt consolidation loan. The interest rate you are charged may be less than what you are paying on your credit cards right now. You will need to consider how long you will be making payments and the total cost of borrowing when you are trying to decide whether this is the right choice for you.

A debt consolidation loan will take your existing credit card debt and combine it into a single loan and your payments will likely be lower than what you are paying on several cards now. The only problem with this solution is that once you have the balances transferred from your cards to the loan, you may be tempted to use the card again.

If you think you may find it hard to resist the temptation to use the cards again, limit your use to the card with the lowest interest rate only. Keep your spending to only what you can afford to pay off each month. Closing your credit card accounts may have a negative effect on your credit rating and you may want to store your other cards in a secure location other than your wallet (just remember to use all of your cards every couple months for small purchases and then pay them off in full because sometimes credit card companies will close accounts that haven’t had activity for a long time).

Consolidating debt is a responsible method for managing debt in some situations. It requires a commitment to the decision in order to make it work. It is one of several methods worth considering.

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Disclaimer: This content is not provided or commissioned by American Express, Visa, MasterCard, Discover, or any other credit card company or issuer. The opinions expressed here are the author's alone, not those of any credit card company or issuer, and have not been reviewed, approved or otherwise endorsed by any credit card company or issuer. Credit Card Chaser may be compensated through various affiliate programs with advertisers. As always, Credit Card Chaser is an independent website commmitted to helping people research credit card offers and find the best credit card!