Credit card debt consolidation is a phrase that you must have come across plenty times. There are hundreds of sites with advice and opinion on credit card debt consolidation. Every now and then your favorite newspaper will also feature an article or advise on credit card debt consolidation. TV channels host panel discussions on credit card debt consolidation. As well, there are numerous consultants and corporations that provide professional advice on credit card debt consolidation. So, what is this "Credit Card Debt Consolidation" that everybody is talking about? Why is it such an critical topic?
"Credit card debt consolidation" refers to consolidation of the statement balance on various credit cards into a single credit card (or a couple of credit cards). Generally, you move from a much higher APR credit card to a lower APR credit card. You might ask 'why?' If you study how the vicious cycle of credit card debt works, you will immediately understand the logic behind it. Credit card debt gets bigger in 2 ways. One is because of the addition of new debt from fresh spending on your credit card and the second is due to the addition of interest charges to the already existing credit card debt. The first one is due to your use of credit cards but the second one is due to interest charges which are figured on the basis of the interest rate or the APR applicable to your credit card. So a lower APR rate means that your credit card debt will grow at a reduced pace and hence switching to a card with lower APR makes perfect sense.
The process of credit card debt consolidation is also referred to as a balance transfer (you transfer the balance or total debt from one credit card to another). Credit card debt consolidation (or balance transfer) offers are made even more attractive by the credit card companies by including various benefits with them. The uncomplicated logic behind offering these benefits is the fact that their new customer is defecting from one of their competitors. The biggest benefit offered by these credit card companies is 0% interest on balance transfers (or credit card debt consolidation). This 0% APR is generally applicable for a very short period of time i.e. 3-6 months, after which the standard APR is applicable. Other credit card debt consolidation offers include things like interest free purchases for a short period, reward points, etc. These credit card debt consolidation offers make the exercise of credit card debt consolidation even more logical and meaningful.
Credit card debt consolidation seems to be a beneficial way of tackling the problem of credit card debt and that is the reason why there is so much of discussion on the subject of credit card debt consolidation.
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