Debt Consolidation Debt Help

3 Good Reasons for Consolidating Credit Card Debt

Written by Rebecca Lake

If credit card bills are dragging down your budget each month, paying them off as quickly as possible can create some much-needed breathing room. When you’re trying to get out of debt, sheer willpower alone won’t cut it; you also need to have a plan for how you’ll pay it down.

Consolidating your credit cards allows you to streamline your payments so you can cross the debt-free finish line that much faster. While consolidation may not be right for everyone, there are some excellent reasons to consider it if you’re tired of handing over you cash to creditors each month.

Reason #1: You want to save money

By and large, the biggest advantage of consolidating your credit cards is the fact that it can potentially save you a tremendous amount of money. If you’ve got four or five cards that you’re paying 10, 15 or even 20 percent interest on, you’re going to have a hard time digging your way out of debt, especially if you’re not able to pay much more than the minimums each month.

Consolidating multiple cards, either through a balance transfer, personal loan, or home equity line of credit, gives you a shot at scoring a lower rate. That means more of what you pay each month goes to the principal, which speeds up your progress and cuts down on what you’re spending for interest.

For example, let’s say you owe $10,000 on four different cards, with an average interest rate of 18 percent. It you pay the minimum of $250 a month, it’ll take you just over five years to pay it off and cost you about $5,400 in interest, assuming you don’t make any new charges.

Now, if you consolidate that amount and roll it into a home equity line of credit with a 5 percent interest rate, you’ll have it paid off in about 3.5 years and pay less than $1,000 in interest. That’s nearly $4,500 extra you’d be able to keep in your pocket over the long run.

About the author

Rebecca Lake

Rebecca Lake is a personal finance writer and blogger specializing in topics related to mortgages, retirement and business credit. Her work has appeared in a variety of outlets around the web, including Smart Asset and Money Crashers. You can find her on Twitter at @seemomwrite or her website,


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