‘Credit card debt consolidation‘ seems to be the most talked-about term in the world of credit cards. Many people have really gotten so used to the convenience of credit cards that they’ve really made them a necessity.
There are but always terrible sides to the excellent. The reality of credit cards is that using them poorly and getting in debt is really terrible, but many people believe that a simple credit card debt consolidation is the fix for this problem.
Anyone who has read any newspaper articles on ‘Credit card debt‘ would already know what credit card debt consolidation is. But, just for the benefit of others, credit card debt consolidation, in simple terms, is the process of consolidating debt which you hold on various high APR credit cards onto just one low APR credit card.
Thus, the main benefit of credit card debt consolidation is realized in terms of APR reduction (and hence reduction in credit card debt growth rate). Many people often say that this is the only benefit from consolidating your credit card debt.
But, credit card debt consolidation comes with few more benefits as well. Some of these credit card debt consolidation benefits are widely publicized by the credit card suppliers and some not so much:
1. Initial APR: One of the largest benefits, as I mentioned earlier is the lower APR that you get. Since credit card debt consolidation is used by credit card suppliers as a tool to attract consumers, they generally offer a 0% APR for an initial period of 6-9 months of you joining their credit card debt consolidation programmed i.e. first few months after you get the new credit card.
2. Standard APR: Lower standard APR (i.e. the long term APR) is the other vital benefit from credit card debt consolidation. Not everyone of your suppliers of credit cards is going to offer a lower standard APR with a consolidation, but many do supply people who do credit card debt consolidation programs with a nice standard APR. These credit card debt consolidation programms offer a trade-off between initial and standard APR rates.
3. 0% on buys: This is another common benefit from credit card debt consolidation. As an added incentive, these companies throw in the 0% interest rate on buys. These aren’t never a full-time benefit though, only for a limited time.
4. Simple management: You rarely hear of this debt consolidation benefit. But, one benefit of credit card debt consolidation (from multiple to single credit card) is the fact that you need to track and manage a lesser number of credit cards.
5. Other benefits: Many credit card companies, especially ones that are co branded, will offer you incentives such as rebates, discounts, and reward points as a measure to secure your business.