|
October 12th, 2007
Unhealthy levels of personal credit card debt are alarmingly widespread among American consumers. Many people approach their total credit card debt by paying only the monthly minimums from pay period to pay period. And some consumers have trouble even making the monthly minimums.
Total debt includes a wide array of necessary living expenses defined by obligatory monthly payments. It includes auto loans, mortgage or rental agreements, student and personal loans, as well as revolving credit accounts. In a healthy financial situation, you should be spending no more than 36% to 38% of your monthly income paying off your debts. For many consumers, personal credit card debt consumes a substantial portion of their monthly cost of living.
Consolidation can offer you a greater degree of financial freedom
If you fall into the category of American consumers whose monthly credit card payments are disproportionate to their monthly total debt expenditures, you should consider consolidating your credit cards. This is especially true for consumers whose total monthly debt demands more than 40% of their monthly income. One way to keep your monthly debt payments at a minimum and regain control of your finances is though credit card consolidation.
By consolidating your credit accounts, you can lower your total monthly debt payments significantly. Many consumers find themselves in a position were they have several credit cards, but they can barely afford to pay the monthly minimums on each card. This can lead to late fees and mounting interest rates. By consolidating your credit card debt, you will only have one monthly credit card bill to pay. It’s easier, and more cost effective, to pay one bill on time than eight different bills. It can also motivate you to pay off your credit cards by putting your total revolving credit debt into perspective.
What to know about “teaser” interest rates
Smart consumers who want to consolidate their monthly credit card debt look for creditors who will consolidate with highly competitive interest rates. Sometimes, you can even consolidate with 0% interest for the first 6 to 12 months. But make sure you pay on time: one late payment can send your interest rate skyrocketing.
Also, any new charges you make to the account after consolidation can be charged by higher interest rates. A “teaser” consolidating interest rate is one in which the credit card company devotes all of your monthly payments to the 0% consolidation debt until it is paid off, leaving your new charges to rack up less than premium interest. In such a case, get two credit cards: one with the consolidated, “teaser” interest rate; and one on which to place any new charges. But if you do this, be sure to pay all new charges placed the second card entirely at the end of every month.
Additional Resources:
Share & Save This Post!
|
