Credit Card Debt Consolidation and Payment

Consolidate Debt as the First Step in a Debt Reduction Plan

Nov 19, 2009 Beth Taylor

Organization is vital to create a debt consolidation and reduction plan.

Credit card and other bills clogging up the mailbox is overwhelming and depressing. Set a goal to take control of debt, and start debt management by consolidating credit card debt.

Organize and Start a Debt Plan

Make a chart detailing credit card debt. Along the top of the chart, write the name of each credit card. In the columns underneath, detail:

Credit limit
Amount owed
Difference between limit and amount owed
APR
Annual fee
Late fee
Balance transfer fee (if known)
Date bill is due each month
Phone number.

Set Goals to Eliminate Debt

Debt elimination strategies only work when debtors stop using credit cards. Consolidating debt onto one card and continuing to use the others makes matters worse, not better.

The main goal is paying off and eliminating debt. Stop using the cards.

Managing Unsecured Debt

Focus on cards that have annual fees. Plan to empty these cards before the next annual fee is due.
Look at interest rates (APRs). Empty cards with high ones first.
After any credit card balance is paid off, contact the issuer in writing and request closing the account.

Consolidating Debt

Looking at all cards, determine if there are any that can be paid off entirely in the next month or two. If yes, do so.
Pick out the cards with the lowest APRs. Transfer as much debt as possible to them.

When transferring balances, call the banks.

Do not use balance transfer checks, call the bank.
Request any balance transfer fees be waived.
Request a lower interest rate.
If necessary, request a higher limit only to transfer more higher interest debt.
Try to transfer only once; banks are less likely to waive fees more than once.

Eliminating Debt

Once debt is consolidated, payments must be made on time every month.

Pay at least the minimum due.
If possible, pay more than the minimum due.

Pay attention to what amount of the bill is due to interest. If possible, pay double the interest to ensure paying off the balance.

Stick to the plan every month to succeed in eliminating debt.

Credit Card Debt Consolidation Company

Avoid companies offering credit card debt consolidation services. The deal may sound sweet: lower payments and no bankruptcy. Reality is more bitter.

Companies offer no guarantee that they will succeed in lowering debt.
They charge fees to customers regardless of the outcome.
Using their services can end up costing a debtor more as a result of the fees.
Customer remains responsible for paying debt.
Use of these services results in a destroyed credit rating, just like in bankruptcy.

Best to consolidate without the "help" of such companies.

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Credit Card Debt Consolidation