Credit card debt consolidation is a phrase that you had to have come across many times. There are tens of thousands of sites with advice on credit card debt consolidation. Every now and then your favorite newspaper will also have an article or recommendations on credit card debt consolidation. TV channels host discussions about credit card debt consolidation. Moreover, there are many consultants and firms that give professional advice on credit card debt consolidation. Well, what is this "Credit Card Debt Consolidation" that everyone is yakking about? Why is it such an important issue?
"Credit card debt consolidation" refers to consolidation of the outstanding balance on assorted credit cards into a single credit card (or a couple of credit cards). Generally, you move from a higher APR credit card to a much lower APR one. You could ask 'why?' If you investigate how the devilish cycle of credit card debt works, you will immediately understand the rationality behind it. Credit card debt grows in two ways. One is due to the addition of new debt from recent spending on your credit card and the second is due to the addition of interest charges to the existing credit card debt. The first one is thanks to your use of credit cards but the second one is coming from interest charges which are calculated on the basis of the interest rate or the APR applicable to your credit card. Therefore a lower APR rate means that your credit card debt will grow at a slower pace and hence switching over to a card with lower APR makes excellent sense.
The process of credit card debt consolidation is also referred to as a balance transfer (you transfer the balance or total debt from one credit card to another). Credit card debt consolidation (or balance transfer) offers are made even more irresistible by the credit card banks by including different benefits with them. The simple logic behind offering these benefits is the fact that their new customer is defecting from one of their competitors. The biggest benefit offered by these credit card companies is 0% interest on balance transfers (or credit card debt consolidation). This 0% APR is typically applicable for a short period of time i.e. 3-6 months, after which the everyday APR is applicable. Other credit card debt consolidation offers include things like interest free purchases for a short period, reward points, etc. These credit card debt consolidation offers make the exercise of credit card debt consolidation even more logical and meaningful.
Credit card debt consolidation is a good way of tackling the predicament of credit card debt and that is the reason why there is so much of discussion on the topic of credit card debt consolidation.
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