What is ‘Credit card debt consolidation’?

‘Credit card debt consolidation’ is a phrase that you must have come across many times. There are hundreds of sites with advice on credit card debt consolidation. Every now and then your favourite newspaper will also contain an article or advise on credit card debt consolidation. TV channels host discussions on credit card debt consolidation. Moreover, there are numerous consultants and companies that provide professional advice on credit card debt consolidation. So what is this “Credit card debt consolidation” that everyone is talking about? Why is it such an important topic?

“Credit card debt consolidation” refers to consolidation of the debt on various credit cards into a single credit card (or a couple of credit cards). Generally, you move from a higher APR credit card to a lower APR one. You might ask ‘why?’ If you look into how the vicious circle of credit card debt works, you will immediately understand the logic behind that. Credit card debt grows in 2 ways. One is due to addition of new debt on account of fresh spends on your credit card and the second is due to addition of interest charges to the existing credit card debt. The first one is due to your use of credit card but the second one is due to interest charges which are calculated 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 slower pace and hence switching over to a card with lower APR makes perfect sense.

The process of credit card debt consolidation is also referred to as balance transfer process (you transfer the balance or debt from one credit card to another).The credit card debt consolidation (or balance transfer) offers are made even more attractive by the credit card suppliers by associating various benefits with them. The simple logic behind offering these benefits is the fact that such a customer would be defecting from one of their competitors. The biggest benefit offered by these credit card suppliers is 0% interest on balance transfers (or credit card debt consolidation). This 0% APR is generally applicable for a 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 purchase 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 good way of tackling the problem of credit card debt and that is the reason why there is so much of discussion on the topic of Credit card debt consolidation.

Credit card debt consolidation loan

Credit card debt consolidation is regarded as the first step towards getting rid of credit card debt. Credit card debt consolidation loan is one of the ways of consolidating credit card debt. Besides, credit card debt consolidation loan, you can also go for balance transfer to another credit card. In fact, due to the publicity by credit card suppliers, balance transfers seem to be more talked about than credit card debt consolidation loan. Some people kind of forget about credit card debt consolidation loan being available as a method of credit card debt consolidation. However, credit card debt consolidation loan too is important to consider when going for credit card debt consolidation.

So what do we mean by credit card debt consolidation loan?

Put simply, credit card debt consolidation loan is a low interest loan that you apply for with a bank or financial institution in order to clear off your high interest credit card debt. So credit card debt consolidation loan too is based on same principle as balance transfers i.e. moving from one or more high interest debts to a low interest one. The credit card debt consolidation loan has to be paid back in monthly instalments and as per the terms and conditions agreed between you and the dispenser of credit card debt consolidation loan.

Credit card debt consolidation loan, in general terms, is an unsecured loan i.e. doesn’t require you to pledge any security. However, if you have a really bad credit history and you want go for credit card debt settlement using credit card debt consolidation loan, the credit card debt consolidation loan will take the form of a secured credit card debt consolidation loan. This type of credit card debt consolidation loan requires you to pledge a security e.g. the home owned by you or something else that has a value which is comparable to your credit card debt consolidation loan amount. So, worse the credit rating, the more difficult it is to get a credit card debt consolidation loan.

Though balance transfers and credit card debt consolidation loans have the same objective behind them, the credit card debt consolidation loans are sometimes considered better because you end up closing most of your credit card accounts which have been the main culprit in landing you in this difficult situation. However, balance transfers have their own advantages which are not available with credit card debt consolidation loans. Choosing between credit card debt consolidation loan and balance transfer is really a matter of personal choice.

Consolidate credit card debt

We know that it’s good to consolidate credit card debt (at least that is what we keep hearing from everyone). In fact, the first step towards addressing the problem of credit card debt is to consolidate credit card debt. Now, what do you do to consolidate credit card debt? Should you just go with that attractive ad in the newspaper that says ‘...the lowest APR in the town is available here’?

The first thing, really, is to keep your eyes and ears open. There are always a number of offers available for you to choose from. The credit card suppliers keep coming with new and more attractive offers asking you to consolidate credit card debt with them. However, you must note that the APR quoted in bold, e.g. 0% APR, is applicable only for a short term (3-9 months). The long term (or the standard) APR is different. So, when you go looking for a credit card to consolidate credit card debt, you must be keenly looking for these 3 things (in terms of APR) – introductory APR, introductory APR period and the standard APR. Let’s see how each one is important.

Introductory APR is probably the most attractive thing to look for when you are looking to consolidate credit card debt. If you consolidate credit card debt to a card that has a low introductory APR e.g. 0%, the first thing you get is a breather/relief in terms of the rate at which your credit card debt has been growing. Based on how long that 0% APR period is (generally you will look to consolidate credit card debt with a credit card supplier who offers 0% initial APR), you will at least be able to temporarily break the growth rate of your credit card debt. More the introductory period, the better it is. However, you should not ignore the standard APR when you consolidate credit card debt. This is the interest rate that will be applied to your balance after the expiry of the introductory low APR period that was given to lure you to consolidate credit card debt with that credit card supplier. If the standard APR is too high and you know that you will not be able to clear off the entire credit card debt during the low APR period, that credit card is probably not the best for you to consolidate credit card debt to. However, if you think that you will be able to clear off the entire credit card debt during that period, you can make some compromises on the standard APR of the credit card to which you consolidate credit card debt.

The card that synchronizes with your current and future financial position (and needs), is the one you should consolidate credit card debt to.

College student credit card debt

Credit card debt doesn’t shy away from anyone who doesn’t want to shy away from it. It treats everyone equally irrespective of whether the person is a seasoned professional or just a college student. So college student credit card debt isn’t uncommon either. Since the credit limit on college student credit cards is much lower, the college student credit card debt cannot rise to the levels it does for other credit cards. However, college student credit card debt is an even bigger menace because a lot of students are already in debt due to the loan they have taken for their education. If they pass out of college with college student credit card debt, they will have to payback not just the loan they taken for studies but also their college student credit card debt.

Since most of the college students are inexperienced in the usage of credit cards, they can easily fall prey to what we call as ‘college student credit card debt’. In fact, college student credit card debt is one reason why the credit card suppliers keep a lower credit limit on college student credit cards. The solution for avoiding college student credit card debt is similar to what it is for avoidance of any type of credit card debt. So, the first thing for avoiding college student credit card debt is to understand the concept that credit card is not free money and that whatever you pay-for using your credit card has to be paid back to the credit card supplier when your credit card bill arrives. So don’t treat credit card separate from hard cash. Avoid overspending e.g. do not buy things just because they are on sale, sales keep coming and going and there are always better offers each time; buy only those things that you really need. A good thing to do is to prepare your monthly budget and follow it religiously. Never budge from your budget. Another very important preventive measure for avoiding college student credit card debt is to avoid going for a second credit card. Some students have a tendency to go for multiple credit cards just because the credit limit on college student credit cards is very low. However, this is a perfect recipe for getting into a college student credit card debt. This is how college student credit card debt builds up. One credit card is more than enough for any student.

College student credit card is really meant to be treated like a training ground for learning more about credit cards. It should not be make an instrument of debt (college student credit card debt).

Card com credit debt en language site

So tired that I typed ‘card com credit debt en language site’

Credit card debt can really disturb the peace of your mind. You keep hearing stories about people who run a debt on their credit card debt. Some of these stories are serious and some others are amusing. Here’s an amusing one:

The other day I heard a guy tell his story about how he went on his mission to eliminate his credit card debt. He started with reading the advice on various websites and trying various search engines and he was astonished at the number of results he got. One night he was so tired that he typed in ‘card com credit debt en language site’. After he typed ‘card com credit debt en language site’, he realized that he had made a slight typing mistake in typing ‘card com credit debt en language site’. His actual intention behind typing ‘card com credit debt en language site’ was to search for only English sites (.com sites only) that offered credit card debt related advice. His search amused him even more when he found that ‘card com credit debt en language site’ did actually get him some results. Though the search engine did recommend changing the ‘en’ to ‘in’, there were still some results for ‘card com credit debt en language site’. He just went on to search for ‘card com credit debt en language site’ as just one term. For ‘card com credit debt en language site’ as a single term, he got lesser results than he had got for ‘card com credit debt en language site’ typed in without quotes. He wondered, if a lot of people were making similar searches as he was doing on ‘card com credit debt en language site’ i.e. using random terms with a bit of mistyping. He went on to typing ‘card com credit debt en language site’ on some other search engines, just to check that. Soon, it kind of became a research (and fun) of different kind i.e. searching for ‘card com credit debt en language site’ and checking if ‘card com credit debt en language site’ actually meant something. He thought that it was a bit unusual to have some other people too that were searching for or using the same term ‘card com credit debt en language site’ (especially such a long term as ‘card com credit debt en language site’). When ‘card com credit debt en language site’ was used without quotes, the search for ‘card com credit debt en language site’ did yield some useful yields. So he went on to examine these results that were returned for ‘card com credit debt en language site’. However, that was just the fun part of it and he soon went off to sleep.

Yes, he did have a laugh with his friends the next day.

Before you go for credit card debt help

Generally you will find that there is more credit card debt help available than is actually needed. Just flip through the newspaper and you would be surprised by the number of advertisements related to credit card debt help. Every now and then, there are articles on credit card debt and credit card debt help. Television channels are full of ads related to credit card debt help. There are websites and magazines that are dedicate to credit card debt help. You also hear about the topic of ‘credit card debt help’ being discussed in parliament. There seem to be policies/laws being formed for credit card debt help. All kinds of suggestions seem to be floating for credit card debt help. Everyone, even some of your friends, have a piece of advice related to credit card debt help. All banks seem to offer credit card debt help in term of various loan types (generally short term loans) at low rates.

So, credit card debt help is readily available and in fact even unwanted credit card debt help or advice will flow into your ears. However, not every one offering credit card debt help is proficient enough to be able to provide proper credit card debt help that will suit you. So you do need to understand some basics about credit cards and credit card debt, before you actually go looking for credit card debt help or before you start helping yourself out with your credit card debt. So you should try and understand how the credit card suppliers bill you, how the interest is calculated on your credit card balance and how your credit card debt grows. Understanding all about APR, goes without saying. Even if you think that you had gone through all this stuff at the time of choosing your credit card, you should revisit these concepts to make sure that you still know them. If you decide against going for professional credit card debt help, you will need to understand these concepts in even more detail. All these concepts will become handy when you are comparing various balance transfer offers (for example). Moreover, the knowledge of these concepts will also be helpful in making the discussions with credit counsellor more fruitful.

So credit card debt help really starts with developing a better understanding of credit cards and other concepts related to credit cards (irrespective of whether you go for external credit card debt help or not).

‘Bad debt credit card’- what’s that?

Bad debt credit card is basically a credit card that the credit card suppliers offer to the people who have bad debt. Did that astonish you? Well, don’t let your thoughts run just yet.

You can classify bad debt credit cards into 2 categories based on what you understand by bad debt credit card. The first category of bad debt credit cards is those credit cards that are secured (and are also known as secured credit cards). These bad debt credit cards require a security i.e. you have to open (and maintain) a bank account with the bad debt credit card supplier. The credit limit on your bad debt credit card is calculated as a percentage of the balance you hold in the bank account you have opened with bad debt credit card supplier. Generally, this is 50-100% of your bank account balance. So, this bad debt credit card enables you to spend the amount you hold in your bank account; only the way you spend it changes (i.e. instead of spending that as cash you spend it using your bad debt credit card). So bad debt credit card lets you enjoy the convenience and other benefits that are associated with credit cards, even with a bad debt. This security is as such important for the bad debt credit card supplier; after all how can you trust someone who has a bad credit rating.

The other category of bad debt credit cards are nothing unusual, they are the same cards that we know of most commonly; the only difference is in the way you get them and the objective behind getting them. Here, we are talking about the credit cards that you use as a debt consolidation mechanism i.e. consolidating bad debt (as such any debt is bad). So we can call them bad debt credit cards too. These operate by transferring of the balance you owe on your current, high interest credit cards to these bad debt credit cards that have a lower APR (at least for some initial period). Hence, these bad debt credit cards help you in consolidating your debt and getting some relief from the higher APR that you were experiencing on your current card.

Some people accept both of the above categories of credit cards as bad debt credit cards while others tend to go with one or the other. So, what you regard as a bad debt credit card is really a matter of personal choice.