Steps to Consolidate My Credit

So now you understand how credit debt works, and you're ready to start tackling your own. Find out the three critical steps to credit debt reduction.

High-Rate Credit Debt Takes Priority

High-interest credit debt is a powerful drain on your cash flow because, even if you increase your monthly payments substantially, most of your payment still goes toward interest. This helps your creditor by increasing profits, but it does nothing for you. Consequently, Consolidate My Credit strongly encourages consumers to make high-interest credit debt their #1 priority. To give you an example, let's say you have two credit card accounts, both with $2,000 balances. One card has an APR of 20%, and the other has an APR of 8%. If you pay 4% of the balance on the high-interest card and 2% of the balance of the lower-interest card each month, you would save over $950 in interest and 18 months of payments over making 3% payments on the cards each month. The take-home message: it saves you serious money to prioritize credit debts with high interest rates. You will get out of debt faster while also saving money on interest.

Make High-Interest Debt Low-Interest Debt

Many Consolidate My Credit visitors don't realize that their interest rates are not etched in stone. You can move your credit debt around to get more favorable interest rates. You might even be able to talk to your creditor to get lower rates even if you stick with the same account. Balance transfers are one way to transform high-interest debt into low-interest debt. Your other creditors might offer you 0% balance-transfer deals where you can move high-interest credit debt to a card with more reasonable interest rates. Similarly, you could also sign up for a debt consolidation program, which lowers your interest rates for good without having to shift your debt around. A credit debt consolidation program makes special arrangements with creditors to provide lower interest rates to its customers. Finally, you could call your creditor, plead your case, and ask them to reduce your interest rate. If they refuse, you could always threaten them with a balance transfer, which basically means they lose your business.

Save Borrowing for the Long Term

The best use of credit and debt is to put it toward items that will appreciate in value or at least endure until the credit debt is paid off. For instance, a college education will still be around when you get done paying for it, as will a home. These are two examples of wise, long-term investments. Consolidate My Credit also condones the use of credit debt for big-dollar necessities, such as cars, household appliances, etc. Ideally, though, you should try to save for these items instead of going into debt for them. An example of a poor use for credit debt is taking out a loan or using a credit card to go on vacation or buy tickets to a special event. The vacation will be over in a few weeks, and the concert or sporting event ends in a couple hours. Once the party's over, you will be stuck paying on the debt for years. These purchases have no long-term value, so you're better off saving up for them or passing them up altogether if you don't have the money now.

Make sure you know what is going on and read the insiders guide to credit debt before you decide to make any decisions.