The benefits from Credit card debt consolidationBy Mohit of Bigplanners.com
Credit card consolidation’ seems to be the most talked about term in the world of credit cards.
It’s true that credit cards have been very useful and convenient for us and we, in fact,
treat the credit card as a necessity.
However, with every good you have evil too.
In the world of credit cards, ‘Credit card debt’ is that evil and ‘Credit card consolidation’
is often regarded as a method for treating credit card debt.
What is it?
Anyone who has read any newspaper articles on ‘Credit card debt’ would already know what
credit
card consolidation is. However, just for the benefit of others,
credit card consolidation,
in simple terms, is the process of consolidating which you hold on various high APR credit
cards onto just one low APR credit card.
Thus, the main benefit of credit card consolidation
is realised in terms of APR reduction (and hence reduction in credit card growth rate). This is
touted as the most important benefit (and sometimes the sole benefit) from credit card consolidation.
The Benefits
However, credit card consolidation comes with few more benefits as well.
Some of these credit card consolidation benefits are widely publicised by the credit card suppliers and some not so much:
Initial APR
As mentioned above, lower APR is the biggest benefit from
credit card consolidation.
Since
credit card consolidation is used by credit card suppliers as a tool to attract
consumers, they generally offer a 0% APR for a initial period of 6-9 months of you joining their
credit card consolidation programme i.e. first few months after you get the new credit card.
Standard APR
Lower standard APR (i.e. the long term APR) is the other important benefit from
credit card consolidation.
Though not all credit card suppliers offer a lower standard APR with credit card consolidation some do
design
credit card consolidation programmes with good standard APR. These credit card consolidation programmes
offer a trade-off between initial and standard APR rates.
0% on purchases
This is another common benefit from
credit card consolidation. The 0% interest (or some lower percentage) on purchases is
offered as an incentive for
credit card consolidation. This
credit card consolidation benefit is again applicable only for a short initial period.
Easy management
This
credit card consolidation benefit is not as discussed as others.
However, one benefit of
credit card consolidation (from multiple to single credit card)
is the fact that you need to track and manage a lesser number of credit cards.
The credit card consolidation exercise might bring you some more benefits in terms of
rebates, discounts and reward points (especially if you move to a co-branded card as part of
credit card consolidation) as well so it can be a very sensible idea.
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