Consolidating Credit Card Debt
Because of recent occurrences in the economy, many people are looking for ways to streamline their debts. One of the easiest ways to do this is through a simple credit card transfer – putting all your debts onto one card. There are benefits to credit card debt consolidation utilizing this method.
This is a great idea for many people, but they need to be aware of some basic “traps” that people fall into when combining accounts to consolidate credit card debt. These traps can actually end up costing you a lot of money that you could be applying towards paying down your overall debt. Of course if you are transferring your credit card debt from a 26% interest rate card to a 12% interest rate card, the savings are obvious to see. However, if the rate is not that much difference, the fine print involved may end up costing you quite a bit.
A rather common fee is the balance transfer fee. It isn’t really a hidden fee, but something that you might not think of. While most companies charge a flat fee of $35-$45, some will actually charge you based on your credit card balance. They will charge a percentage of the balance – depending on what the percentage rate is and your balance, this could be quite a bit of money.
Other fees that you should be aware of are usually smaller ones – but these smaller ones certainly do add up. For instance, some companies have an annual maintenance fee that you should be aware of – it is a fee for the privilege of using their card. Some companies add fees for online or over the phone services. Again, these are usually small fees, but depending on how often you do over the phone transfers, it really can add up.
For most people, the ability to consolidate credit card debt into one simple and lower payment makes a lot of sense. It really all comes down to how much you are going to save as well as the conveniences particular cards offer. Just make sure that you do a little bit of homework to check out the fees that are hidden in the fine print.
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