A:

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.

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