Credit Card Debt Consolidation

Generally, a credit card is considered a desirable thing to have. There are many reasons for applying a credit card:

• Convenience
• Good financial standing
• Increased purchasing power among others

In addition to these, there are two other common reasons:

• In order to establish credit in the first place, if you have very little credit history
• A means of consolidating debt

People with no credit history often find it as difficult to obtain loans as people with a bad credit history. Sometimes in this situation, credit card debt consolidation can be a more attainable solution.

Getting credit without any credit history can be a problem. If an emergency arises when you urgently require funds, and you have no credit, you have a problem. Therefore, you need to take steps to build a credit history before an emergency arises. Possible steps you can take to do this include:

• Opening checking and savings accounts at local banks.
• Obtaining gasoline and store cards – these are often easier to obtain than major credit cards.
• Taking out a small personal loan from your bank or credit union and repaying it over time.

If the payments are made regularly it will help establish a credit history. You may then find it easier to go down the road of credit card debt consolidation if it is required.

Credit card debt consolidation also has its pitfalls. In the first place, it is good to apply for a low-cost or zero percent card. But these special rates may not be available for those with a poor credit history – which you may have, if you are already struggling with debt.

In other case the rates may be in such a manner that after some time the rates may suddenly escalate to more than you are already paying. You need to make very sure you know whether and when the special rate will end, and whether it will be possible to move to another card before the rates change.

Few important points to keep in mind:

• Applying for new credit cards every few months is very bad for your credit history.
• These low rates only last as long as payments are made on time. Just one late payment and the rates will shoot up – probably to an even higher penalty rate than you would otherwise have been paying.
• If you make only the minimum payment, there is a real danger that your debt will grow rather than diminish.

Try to use a prepaid card or top-up card . With this you deposit a sum of money into the card and use the card like a credit card. You can apply for one without having much of a credit history or without many credit checks being made.

Always plan your finances carefully. If you still need to consolidate your debt, please take your time to learn as much as you can about it, especially the interest rate they are charging you and also at the very least find out how much the monthly repayment will be. The easiest way to get an estimate about this is to use a debt consolidation calculator.