It has been found that Credit Card debt gets easily accumulated. If you are stuck in the debt and you are not capable enough to make your monthly payments, it is not the end of the world as you can make the most of debt consolidation loan. However, make sure that you are aware of the fact that this loan will not provide you holistic solution. Yes, there are situations where it does come handy financially. Majority of the people have a false illusion that they have in-depth knowledge of the debt consolidation, but in reality the story is other way around. So, let us get acquainted with the things that you didn’t know about credit card debt consolidation.

Choosing best available method for credit card debt consolidation

First and foremost, you have to answer a basic question of whether it is your habit of carrying balances on the various credit cards. If your reply is in affirmative, then you might have gone for the option of debt consolidation. It is plain and simple that if you are having more credit cards, you are liable for paying increasing number of monthly bills. The chances are high that you have to pay more rate of interest as well. In order to get rid of this burden and to reimburse the debt, most of the consumers choose to compile the balances in one single card.

However, prior to making a choice for the consolidation, there are certain points that you should know:

Every scenario is unlike other – If you are really interested in choosing credit card consolidation, make sure that you have answered the following questions:

• What is the initial duration for low-APR window? If the APR duration is of longer period, you will have sufficient time to pay off your debt prior to the rates again rolling back to the standard and in most of the cases APR is on a higher side.
• Keep a check on the credit card statements and get an idea of how much debt that you have. Now, add how much debt you need to owe to the creditors.
• How much amount you are practically capable of paying the credit card on a monthly basis? The main objective is to, quickly, get rid of debt quickly. Therefore, you need to tally up how much you are capable of allocating on a monthly basis.

Considering the above three elements, you can figure out the extent as how much you can save on interest during 0% APR window as compared to the current rates.

The relocation of the balance – The offers of low balance relocation and credit card consolidation end up enhancing the credit score. In order to attain this, there are few things that needs to be followed. For instance, the credit utilization is actually the source through which 30% of FICO Credit Score can be gained. This is the amount of credit that is being used practically.

For having optimum credit, it is important that the balances of the credit card are kept to the minimum. For instance, the credit card limit is $10,000, you need to have credit card balances of $3,000 or less than that. This will show that the credit card that you are thinking of consolidating will have low credit utilization ratio but it won’t influence the overall ratio. However, the low rate of interest that you will be paying throughout the initial period will suggest that you will be paying more balance on a monthly basis. This will prove beneficial in cutting down the overall credit utilization at a swift pace.

Moreover, you should not close old accounts once you have opted for consolidation. The account age is responsible for contributing to around 20% of the credit score. Therefore, if you close your old accounts, this will cut down the overall age of your credit history. Make sure that you have kept your old cards away so that you get to avoid accumulation of more debt.

Relevancy of 0% APR – There are possibilities that initial APR of 10% is applicable only for the transfer of the balances. This may apply the conventional APR for fresh purchases which may be on the higher side. The agreement of your credit card will dictate the actual APR for the purchases and whether any into rate will be applicable or not. Make sure that you have framed a set budget and follow it religiously, this way you get to get away from the credit card consolidation. This will also prove beneficial in paying off the balances much quicker.

Reality behind 0% APR – While a 0% APR is surely a fastest way in which you can pay off your credit card debt and initiate considerable savings on the interest payments; it is not at all free. Balance transfer fees needs to be paid and it usually ranges from 2-5% on each transfer of the balance. In majority of the cases, you get to enjoy future benefits. This is an important element that should be considered while planning for credit card consolidation.

Making a decision for a credit counselor

Majority of the people seek outside assistance in order to tackle their debt. There is nothing wrong in going for this option, make sure that you have cross-checked the standing of the credit counselor. Non-profit is not an assurance of genuine services. In fact, there are some non-profit credit counselors which tend to charge too much fees. Following are some elements that will give you a fair idea of the genuinity of the organization:

• The organization does possess license to provide services in your state or not.
• Offering an extensive range of services which comprise of budget counseling and debt management.
• Whether the organization is flexible to share details of their services without sharing your details with them.
• The counselors do have the license or it is a licensed organization.

Hoping the above discussed things will come handy in getting familiar with the credit card debt consolidation and making plans accordingly.

Lisa Coffey is a writer by profession. She has a knack for coming up with novel ideas. She currently writes for Vantage Acceptance. She contributes ideas related to debt, credit cards and many more. She has also worked for scores of magazines, writing exciting content on various topics.