Consolidating Cards

Consolidating cards are usually low interest rate cards which offer holders of multiple cards the opportunity to consolidate the amounts outstanding on their cards into a single consolidation card. The credit card will usually carry a lower rate of interest than the normal credit cards (sometimes zero), usually at around 2-3% but only for a defined period.

Consolidating cards do have a downside and this is that once the low or zero interest period is finished the interest rate on the card will normally revert to the higher rate (often over 19%). In addition, should cash advances have been made they too would incur a higher rate of interest until repaid in full.

Good management. Credit cards, including consolidation cards, require a mindset of good common sense and tight management. This is the cornerstone of credit card usage and if you are new to using credit cards you should, at the outset, view them as being a high risk tool unless well managed. Then they become a highly useful, convenient and valuable credit tool which can save you time and money.

Consolidation of other credit cards is a sound money management strategy. It allows the consumer to clear debts on a number of cards (for example a store card or another credit card or/and a car loan) into one card. This has a direct impact on cash flow as monthly repayments will be lower. They will be lower due not only to the lower rate on the consolidation card but will also result in lower monthly cash outlays due to the minium payment requirement on the other cards. Hence it is a sound strategy when well managed. Consolidation cards will have terms and conditions and features that should be compared with other card providers.

Features

The interest rate: this should be at the lower end and can in some cases be zero. The zero rate usually applies to cards offering a 6-month term at the zero rate. Most lower rate cards have a rate of under 3% a rate which can apply for up to 12 months.
Rate period. The interest free term ranges from 3-month to 12-month but only if terms and conditions are met in relation to cash advances and repayments terms.
Balance transfer: most will have a balance transfer facility. This is locked-in at the application process where the consumer lists the card(s) that he or she is seeking to clear.
Cash advance facility. This usually incurs a “normal” interest rate and can negate the benefits of the lower interest rate. The conditions of the card should be examined on the terms and conditions page of the offer.
Small annual fee: Whereas some premium cards have annual fees in excess of $100, most consolidation cards can be secured for a fee of between $45 and $55 a year.

Consolidating Credit Cards

When it comes time to pay the bills you probably hate alll the payments you have to make. These payments may include two or more credit cards. An easy way to pay fewer bills would be to consolidate some of your credit cards. Doing a balance transfer from one card to another with the help of your bank is a relatively painless way to turn two card payments into a single one!

Have a look at the Balance Transfer credit cards.