In most cases, credit card consolidation is a wise decision if you are able to get a lower interest rate with the new company at no or minimal cost to you. A credit card balance of $15,000 with a 19.9% interest rate could cost you as much as $2,985 in interest charges alone in a year if you continue to carry the same $15,000 principal amount. If you're able to consolidate your credit and reduce your interest rate down to 9.9% (thru a consolidation move) you would decrease your annual interest down to $1,485 (assuming the same $15,000 balance throughout the year). This savings on interest can then be applied to your principal amount to help you get your debt paid off faster.

So, how can you consolidate? One method is to check the rates on all of your credit cards and compare them from high to low. Once you've found the lowest one, check your credit limit to see if you have any room for consolidation to that card. If no, try giving the credit card company a call to see if they will increase your credit limit because you are doing a consolidation. Be aware that some companies will charge a balance transfer fee on the transfer amount. It is important that you make every effort to have this transfer fee waived. However, if they won't budge on the fee- sometimes paying a fee is still worth it if you can reduce your interest rate by more than the fee charged. You'll need to get out your calculator and figure out if you'll still save some money.

Other options might include utilizing your home equity line of credit as a consolidation vehicle, asking a family member or bank for a short-term loan, or contacting a professional debt consolidation company to work with you.

For steps on streamlining the consolidation process, check out Debt Consolidation Made Easy.

This question was answered by Steven Merkel.

  1. Will my credit score suffer from debt consolidation or refinancing?

    You have several options for reducing your debt burden. You can enroll in a professional debt management plan, or consider ... Read Full Answer >>
  2. Can I file for bankruptcy more than once?

    Filing bankruptcy is never a simple decision, but sometimes it is the best thing you can do in your current financial situation. ... Read Full Answer >>
  3. Does consumer protection cover my debts?

    The most impactful consumer protection laws and regulations in the United States are overseen by the Federal Trade Commission ... Read Full Answer >>
  4. Can my IRA be garnished for child support?

    Though some states protect IRA savings from garnishment of any kind, most states lift this exemption in cases where the account ... Read Full Answer >>
  5. Can creditors garnish my IRA?

    Depending on the state where you live, your IRA may be garnished by a number of creditors. Unlike 401(k) plans or other qualified ... Read Full Answer >>
  6. How can I take a loan from my 401(k)?

    The majority of employers offer eligible employees the opportunity to save for retirement in a qualified plan through paycheck ... Read Full Answer >>
Related Articles
  1. Savings

    Your 6 Worst Financial Mistakes

    Here are six financial mistakes you may be making, and a viable alternative for each.
  2. Savings

    What is a Bounced Check?

    Bounced check is a slang term to describe a check that cannot be processed because its writer has insufficient funds.
  3. Credit & Loans

    Explaining Leveraged Loans

    Leveraged loans are loans extended to companies or people who already have large amounts of debt.
  4. Credit & Loans

    5 Credit Cards For the Super Rich

    Understand the difference between an average credit card and an elite credit card for the wealthy. Learn about the top five credit cards for the super rich.
  5. Credit & Loans

    Explaining Equated Monthly Installments

    An equated monthly installment is a fixed payment a borrower makes to a lender on the same date of each month.
  6. Budgeting

    Best 5 Money-Saving Tips to Get out of Debt

    Understand the different types of debt and the reasons why people get into debt. Learn about five tips to follow to get out of debt.
  7. Credit & Loans

    Your Credit Score: More Important Than You Know

    Credit scores affect key aspects of your personal and professional life. Knowing your score and managing your credit input can make a big difference.
  8. Economics

    Understanding Bad Debt

    Bad debt is money a company or lender is owed, but is unable to collect.
  9. Investing

    Why You May Not Need an Emergency Fund

    Emergency funds are considered mandatory by most financial-planning experts, but they can be expensive to hold and ultimately unnecessary.
  10. Professionals

    Small Business: Minimize Your Credit Card Fees

    Accepting credit cards is a must these days, but small business owners can take steps to minimize profit-eating credit card fees.
  1. Debt/Equity Ratio

    Debt/Equity Ratio is debt ratio used to measure a company's financial ...
  2. Transferable Points Programs

    With transferable points programs, customers earn points by using ...
  3. Luhn Algorithm

    An algorithm used to validate a credit card number.
  4. Personal Property Securities Register (PPSR)

    A written, public, online record of legal claims to personal ...
  5. Roll Rate

    The percentage of credit card users who become increasingly delinquent ...
  6. Truncation

    The requirement mandated by the FTC for merchants to shorten ...

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!