Credit Card Consolidation: Your Ticket out of Credit Card Debt

Credit cards sure are nifty. The nice people from Visa give you a five thousand dollar spending limit, smile, and bid you, "happy spending!" Then the bill comes, and it’s a simple matter to let it collect dust until the card is maxed. That’s when you're in trouble. Monthly interest on the cash you've spent from MasterCard's treasury can easily accrue to the point where it’s the only thing you can afford to pay. Then you're stuck in a vicious cycle; you're giving the bank, say, nine hundred dollars a month, but you're not actually decreasing your debt. You're just covering the interest.

Credit card consolidation is the best cure to this common ailment. Ignore the word for a minute. Its big, clunky, and while it has a definition, its one of those soft sounding corporate words that somehow fails to convey any real meaning. It literally means, "To Compile Together - To Combine." Remember that your credit cards are only credit to you. To everyone else, they're real money. They can think of it that way. You, the savvy credit card user, should look at it from a slightly different perspective. Think of your credit cards as an easy to access high interest loan. The money attached to your credit card is not yours to spend--it's yours to owe. The debt from your new sofa, last week's cheeseburger, and your new set of music CDs are transferred from the merchant to Visa. You haven't actually paid for it yet. It’s a simple concept, but many people fail to realize the nature of a credit line, and dig themselves into a gigantic pit of debt.

Credit card consolidation means to shift the debt from one or several medium to high interest rate cards onto a low interest rate card, or even a 0% interest card. The lower the number, the better. Now every time you make a payment on your card, you're shaving off actual funds owed; not just some sneaky interest rate.

Of course, some debts are too large to juggle from one credit card to another. You can still use credit card consolidation, but you have to be a bit craftier about it--and take a few more risks. You can apply for a home equity line of credit. You're literally, at this point, taking the roof over your head and putting it on the bargaining table. You're offering up the value of your property in exchange for a significant credit line. You can shift all of your credit card debt over to this credit line and save a *lot* of money on the interest rates, paying only one monthly bill.

Just remember to cut your credit cards into little slivers when you're caught up. It'll save you money, time, and peace of mind.