Consolidating credit cards refers to the option of combining various credit card debts into one credit card instrument. Credit card consolidation, also commonly known as balance transfer, offers credit card consumers an expedient means of managing and controlling their finances.
Credit card consolidation, in the strictest sense, entails paying off the balances incurred on other credit cards. A new credit card is issued or an existing account is used and the credit card issuer makes full payments to other credit card companies. The sum total of the balances paid to other credit card companies becomes the consolidated principal balance on the new card. There may be transaction fees involved with the transfer and these fees are also added to the principal.
Consolidating Credit Cards: The Need
One great predicament most credit card holders have is acquiring more credit cards than necessary. Having more than one credit card expands a person’s spending power and exacerbates the difficulty of controlling and monitoring expenditures.
Using multiple credit cards lead to confusion over different payment due dates and minimum dues. More often than not, having several cards also results in cash flow difficulties. Consequently, consumers with multiple credit cards usually find themselves past due in one or two credit cards where they are subsequently levied higher interest rates. Consolidating credit cards offers a viable solution to this problem.
Consolidating credit cards, however, is more effective as a preventive measure. If you find yourself having difficulty juggling your accounts and remembering which card is due when, it is time to consolidate all your credit cards into one. This will prevent the possibility of incurring late fees and higher interest rate charges, both of which could ultimately ruin your credit.
Consolidating Credit Cards: From a Business Perspective
Credit card companies offer consumers credit card consolidation to expand their customer base. From a credit card company’s perspective, when it is able to convince people to transfer their debts, the credit card company benefits from long-term interest payments. Moreover, when more people use their credit cards to make purchases, they can negotiate better deals with merchants whose merchant fees are another major source of revenues.
Consolidating Credit Cards: Consumer Options
Credit card companies induce consumers into consolidating credit cards by offering a special introductory annual percentage rate of 0% for a specific number of months (say 12 months). Some credit card companies offer a low and fixed annual percentage rate like 2.99% which would apply on the balances transferred from other credit cards until such balances are completely paid off. Some credit card companies do not even charge balance transfer fees.
Different credit card companies offer different credit card consolidation plans. Make sure to explore all of your options so you can get the best offer available for consolidating credit cards.
Jinky Bagagñan is a team member of Online Creative Solutions which is an online company that provides writing, rewriting, editing and proofreading services to webmasters and other publishers. Visit http://onlinecreativesolutions.110mb.com/ocs.htm for details.
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