Is Credit Card Consolidation Worth It?

Charlotte Miller

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If you’re like most people, you have several credit cards. It’s very easy to simply charge what you want or need and then forget about it–until the bill comes later. That makes it very easy, as well, to rack up credit card debt quickly. 

When you find that the credit cards have taken over your budget and you can no longer figure out how you are going to get out of the debt, credit card consolidation might be an option to consider. 

But is it really worth it? 

Many times, yes, but not every time. Here are some times when consolidating those credit card debts under one loan are worth the effort.

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When You Can’t Afford The Individual Payments

The best option for credit card consolidation is often looking into a personal loan and any consolidation can be a smart move, or at least something to look into, if you have card after card coming in and you need to pay the bills, but you just can’t afford all of them each month. 

If you can’t afford all of the payments, you might want to consolidate the cards into one loan. Then, you just have the one payment, which would be lower than all of the little payments combined. It makes the pay back process affordable and effective.

When The Interest Rates On Various Cards Are High

Credit cards have notoriously large interest rates. In fact, if you are trying to pay off those debts, you might only be able to pay the minimum each month and that could just be the interest off the top, not even any of the loan itself. You won’t ever get anywhere and the debt will only get higher as you go. If you have high-interest rates, the lower rates on the consolidation loans can really help you pay back the loans at a faster rate and pay less each month in the meantime.

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Before Your Credit Score Suffers

There are lots of things that can damage your credit and when you have loans that you aren’t able to pay back, that’s a huge demand on your credit score. Having bad credit makes it hard to get loans for a house, or anything else, and sometimes, employers even look over credit scores to see how responsible their potential employees are. 

If you know your credit score is about to go down in the dumps, you might want to look into credit card consolidation so you can put all of the cards into one loan. You are able to pay off the credit cards and then, show your reliability in paying off the one remaining loan. That will help to raise your credit score bit by bit as time goes by.

When Your Loan Amount Is Small Enough That You Can Cover It

As you start to think about getting rid of credit card debt, one reason to move forward with the consolidation of those card loans is if you have done some number crunching and you know you can afford the loan amount that you would have to cover if you moved forward. 

It wouldn’t be worthwhile for you to get a personal loan and pay off the credit cards if you can’t afford the loan payments you are getting into. In those cases, you may have to look into settling the debts or possibly bankruptcy.

When you have credit card debt and it only seems to be mounting and not going down, you may want to look into credit card consolidation as a viable option. It doesn’t cost you anything to look at your choices and find out if it’s a good solution for you. The best way to go is to talk with a financial professional who can give you specific advice about your situation and the options that would be the best for you moving forward.