The process that helps you to lower the number of credit cards that you have though not the amount and the interest rate on your debt is known as debt consolidation or credit card consolidation. There are two main ways in which you can consolidate your credit cards and these are the Do it yourself or DIY process and the debt consolidation assistance. In the case of DIY, as the name suggests, you consolidate your credit cards on your own. In the other form, you get help from a debt consolidation company.

But most of the things in this world come with both some advantages and disadvantages. So is the case with credit card consolidation. It has both pros and cons related to it and if you are planning to consolidate your credit cards it is important for you to know the pros and cons of debt consolidation.

Credit card consolidation pros

The most obvious pros of debt consolidation are:

1. Lowers the interest rate – In case of credit card consolidation, as you transfer the balance from all the other cards to a low interest credit card or a new credit card with 0% offer on balance transfer, the interest rate lowers. Same is the case with a consolidation loan from a credit card consolidation program.
2. Lowers the payment amount – As the interest rate lowers, so does the payment amount. Thus it becomes much easier for you to make the payments.
3. Reduces the number of debts – As the several credit cards that you have gets consolidated, the number of debts that you have gets lowered to only one.
4. Debt management becomes easier – As the number of credit card debt lowers to one, it becomes much easier for you to make the payments. It is more manageable to handle a single creditor instead of  many.
5. Bankruptcy can be avoided – With the help of debt consolidation too, you will also be able to avoid bankruptcy. As you consolidate the credit cards, the interest rate lowers and the number of monthly payments get reduced too. Thus as said before it becomes easier for you to continue making the payments. Thus the debt situation gets controlled and you are able to avoid going bankrupt.
6. Improvement of credit – As you make the payments through the credit card consolidation, it helps you in improving your credit. But, there are some strategies that you should follow in order to really improve your credit through consolidation.

Credit card consolidation cons

Not so known but obvious debt consolidation cons are:

1. End up paying more – In debt consolidation, you can even end up paying more on the interest rate if you opt for longer payment time and if you make only minimum payments.
2. You may get scammed – If you go to a consolidation company for help, you may even get scammed. There are many such shady businesses that don’t even bother to help the people in distress. Thus, it is important for you to first check the authenticity of the company with the Better Business Bureau or the BBB and the State’s Attorney General.
3. May end up hurting credit – In the case of credit card consolidation through balance transfer, you can even end up hurting your credit if you close down all of the credit card accounts at the same time.

So, you can see that there are some pros and cons involved with debt consolidation. Most of the people are aware of the pros of debt consolidation but stay oblivious to the cons. But the cons may be avoided if one has proper awareness about the debt consolidation cons.

Sometimes I get letters from credit card debt agencies saying i owe the same balance that i had for 6 years, but sometimes shows more balance with interest but only one letter said this, the rest all had same balances which were 6 years ago when I was in debt of £2,000, but one letter said £6,000, I have not replied or ever gotten back to the debt credit card collectors, agencies etc, so whats going on, does default mean no interest charges?

Like I’ve already told you, you just wait until they finally catch up with you and you’re in for the surprise of your life! “Interest” won’t come into it ! ! !

Is there a limit to how big of a purchase I can make with my debt card? As long as I have the funds in my bank account I should be able to purchase anything as long as it doesn’t exceed my balance right? Would my bank deny a large transaction for security purposes? I’m just curious as I need to pay about $1400 and wondering if I should just withdraw the cash if it’s going to cause problems by me using debt to pay for it.

thanks

Credit and Debit Cards Questions including "How to prevent and report credit card fraud or identity theft" and "What can you do if your credit card company …

Is there an exact amount of debt or is it if you have any kind of bills in collections no matter the amount? I have a couple of bills in collections that equal to about one thousand dollars. Would that disqualify me from getting a secret security clearance from the army? If anyone knows the amount I would appreciate the help.

They’re looking for anything which might be likely to leave you open to coercion by unfriendly agents. In truth, this could be any level of debt which you cannot manage in their opinion.

For instance, if you had a total debt of $1000 with a credit card company, but your salary is $2000 per month, this is perfectly managable.

However if you had an unsecured loan-shark debt of $1000 at 200% interest per month and no salary, they might view it differently.

Best regards.

am in serious need of help, but everytime I think I have found something, the company only helps with credit card or mortgage debt. i have student loans and medical expenses that I need help with. Thanks for any advice.

FYI, there is very little that you can do about student loans as they never go away. try www.nfcc.org

I am the second cardholder but my debt is huge. I’ve used it to pay my university and now my mother (who is the first cardholder) is putting a lot of pressure on me. I only pay the minimum because I’m a struggling graduate …but it is too much already £160 per month and I can never afford to pay interest (which is around £125.)all my money goes to the credit card.
She refuses to talk about it or help in any way so I wanted to know if I can do a balance transfer and therefore paying off this one and become the first cardholder of the new one. so that she doesn’t do my head in and so that i manage to pay it off.
I didn’t use it to buy goodies or unimportant things so pls don’t judge.

thx
btw, the debt is £6000
and it’s been 4 years of debt and i’ve never missed a payment
I’m desperate now

You’ll be lucky if any balance transfer gives you even as much as 2k.
Why don’t you try for a bank loan instead?

I need to know what the total budgeted federal debt it. I have found the actual federal debt, but not the budgeted federal debt. Need help ASAP! Thanks!

Debt is not budgeted. Debt service is budgeted. For example, anticipated interest payments, amortization of bond principle, fees, etc. Good question! Should be included in the budget list.

Think tax rates will need to rise? I think so!

My fiance is in about 2k of debt and really stressed out all the time. I feel like his stress from his debt is getting in the way of our relationship because he is not as happy as he should be. When he first got in debt I offered to help but he refused, since my income was not that great at the time either (but I had money saved up that I could lend) and I think it hurts his pride to. He works but has bills to pay and even when he does put money towards it it’s not enough and it just grows and never really shrinks. I am going to start a new job soon where I will be making some real money and I really want to just help him pay it off so we don’t have to worry about it coming back later on. Do you think I should just let him keep trying to pay it off him self and not even try to offer the help or try to help again in the future when I will be making some decent money? He is most likely going to refuse again but I atleast want him to know that if he wants to end his debt at that time he could.
In case it matters, he originally got into debt because of schooling. Before he was 18, (he started college a little early) his parents told him to pay with his credit card (because supposedly it would help build good credit) and that they would pay him back, but never did. He went into debt and didn’t get a job until several months later but it grew by then. He may not be very good with money but personally my credit is nearly perfect and I am great with money so I feel like we could balance it out.

Be careful with this. Finances are a huge issue and I would not help him until you were married and HIS debt problem jointly becomes YOUR debt problem.

I know you have offered, but he has already said no once…don’t continue to hurt his pride. The next step is to marry the guy and pay off his debt as a one-year anniversary present.

Now just a few tips since you are marrying someone in debt…
1) Ask him how he got in debt in the first place
2) Have one joint account in which you put only the money necessary for that month
3) Have a savings account that only you have access to (if he cannot be trusted to not touch it)

I have a debt of $5,000 from a credit card. I was going to sign up for a debt relief program that the bank referred me to, but my friend said that it was a scam and you will end up paying more with them. Who do i go to that is really going to help me pay off my debt and has my best interest. I am so lost.

These companies do nothing for you that you can’t do yourself.

Get a book on Credit and Debt Repair from your library or bookstore.
The first step is to call all your creditors and see if they wil reduce the interest rate.
Tell them (lie) that you are going to do a balance transfer.
They may say you can’t – they may lie back.
Play hardball and see if you can get the interest rate reduced.

The book will tell you these things.
Then you get the card with the highest interest rate an pay that off.
Not the highest balance, not the highest amount of interest, but the highest % APR.

If you can’t handle all this there is a non-profit out there to help you at no cost.
Reviews call them angels from above.
YOu call up the 800 number and you make an appointment at a local office.
National Foundation for Credit Councelling. http://www.nfcc.org/
If they put you on a DMP , debt management program the cost is only about $30 a month, but only if you can afford it.
Again, they do exactly what books tell you to do.

These debt relied companies – welll, I consider them borderline scams.
Most people end up in court being sued anyway..

I’m kind of young, but feel that I would be very successful in the debt collection business. I want to change how they treat people and I really want to be my OWN company. How can I go about setting one up? Where do I find the debt? Please help!

Debt collection companies buy debt from other businesses. The reason businesses sell debt is because they need cash flow, and are quite willing to sell the debts at a discount (anywhere from 5% to 25% off the amounts owed). it is then up to the debt collector to get the payments.

Note; to buy these debts you need to have the money to pay for the debts you can collect, and good debt collection companies don’t work on commission based on what they collect – that way they’d finish up with all the really bad debts that will probably never be paid, and they’d go broke!