Consolidate Credit Card Debt

If you want to consolidate credit card debt, there are many options out there that can potentially save you money and make your life easier. Every debt consolidation method has its advantages and potential pitfalls, and it's worth taking the time to tip your chosen method of credit card consolidation to make certain you don't fall into any consumer traps.

A good debt consolidation plan can solve your specific credit card debt problem, and regardless of the size of debt, there are options available to you. It's important not to let the prospect of debt overwhelm you as there are ways to manage most any financial problems in a cost effective way that will eventually see you debt free.

Here, we examine a few different ways to consolidate credit card debt, and it may be worth looking at our credit card consolidation tips to see some common consumer traps that we've seen and want to help you avoid. You will also find useful information on reducing the likelihood of unplanned future debt.

Every financial situation is different, and the following information is not an endorsement of any particular method of debt consolidation. If credit card debt is a major problem for you, we suggest talking to an independent financial professional to gain advice on the best course of action for your specific situation.

Methods To Consolidate Credit Card Debt

Balance Transfer Credit Cards

Many people take advantage of balance transfer credit card special offers to pay off debt in a low interest or interest free environment. There are balance transfer cards to suit debts of all sizes, and you can compare credit cards right here. It's important to choose a balance transfer credit card to suit your debt, and remember that many balance transfer credit cards have the introductory rate for a limited period or with other conditions.

Small To Mid-Size Credit Card Debts - If you are only harbouring a small credit card debt (that you can pay off in around six months), or perhaps you are thinking about switching to a better value credit card anyway, there are credit cards on the market that offer 0% balance transfer rates. Make sure you choose a card that will offer good value for you even after the introductory periods are over, and make sure you understand the terms and conditions.

For example, there may be a limit on the number or amount of balance transfers you can perform, and in most cases, you will have to pay off the balance transfer before any purchases you put on the card (something true for all levels of balance transfer credit cards). Your low rate may be compromised if you miss payments, and it's good advice to pay off your balance transfer before you use the card.
Mid To Large-Size Credit Card Debts - To consolidate credit card debt that you estimate will take a year or so to pay off, it's best to look for a balance transfer credit card with the corresponding introductory rates. The idea, and this is true of all balance transfer credit cards, is to pay off the debt before the introductory terms run out.

Often, balance transfer credit cards revert to the cash advance rate when the introductory period expires, which can be much higher than the purchase interest rate that is normally advertised. Don't get any ideas about switching cards too much either. This can look bad on your credit file (a permanent file kept on your financial activity, for more info go to mycreditfile.com.au).
Large Credit Card Debts - Even large credit card debts can be consolidated with the right balance transfer credit card. You will have to shop around, but you may be able to find a credit card that offers low rates for multiple years or even for the life of the balance transfer. If you are applicable and disciplined in not using the card, this can be an excellent deal.

If you do choose to consolidate credit card debt that is quite large, make sure you have a good financial plan. If debt is a problem for you, consider tearing up any credit cards you are paying off and always read the terms and conditions so you are sure you are getting the right deal.

Make certain you can balance transfer the full amount, and look out for balance transfer fees. Some conditions will see you pay a different rate for multiple balance transfers, so if there are any doubts, contact the financial institution.

Personal Loan

If financial discipline is a problem for you, or perhaps you would prefer a structured approach, then a personal loan may suit you. While personal loans often incur interest rates higher than some credit cards on the market, a personal loan will be cheaper than the 20% interest rates that may be causing you pain at the moment.

The benefit of a personal loan for people looking to consolidate credit card debt is the rigid structure. You have set repayments each week/month that will see you pay off the loan quicker than the minimum payments on most credit card accounts. If debt is getting out of control, you may want to consider swapping your credit card for a Visa or MasterCard debit card, which will only allow you to spend money available in your account.

Debt Consolidation Loans And Bad Credit Specialists

Overwhelming debt is not an uncommon problem in Australia, and unfortunately it's not that uncommon to have a credit card debt problem. You may have a bad credit rating or simply have come upon circumstances that have you facing more debt than you can handle.

There are still options that can see you get back on track or resolve any financial issues. It may be wise to contact a financial counsellor, and depending on your state, there may be a government initiative or at least an independent service that will offer free, no-obligation advice.

It may be as simple as examining your lifestyle and making some sacrifices to see you living closer to your means, or you may have to use a debt consolidation loan from a bad credit specialist or similar financial agency. There are many reputable organisations that bring debt under control in your life, but beware of any practices that can see you worse off in the long run.

Don't let desperation ruin your commonsense, and beware of interest rates that may be higher than you're paying already or high fees paid to the debt consolidation company. In some cases, it's worth considering if you can negotiate terms yourself, and again, our advice is to speak to an independent financial counsellor if things are dire.

Equity Finance

For those people with a mortgage, you may be able to utilise home equity finance that borrows against the security of your home. These loans can be cheap and cost effective, but it's important to realise that further arrears may work against you. If things go bad, you may lose your home.

You may also be able to use other assets as security for a loan to consolidate credit card debt, such as your car or any other items of large value. Again, this can be cost effective, but if things go bad obviously the risk is quite large.

No matter the size and scope of your debt, chances are the right debt consolidation can put you on the path to successfully managing your finances and obtaining a better value way to pay off expenditures. Always make sure you understand the terms and conditions of your credit card consolidation, and if in doubt, contact the relevant financial institution or an independent financial specialist.