One of the most frustrating experiences in the world is the feeling that you are being completely crushed by the weight of your debt. The easiest way to relieve that feeling is to get yourself involved in a good plan for debt consolidation which will reduce the immediate strain of high monthly payments while also allowing you to set goals for ultimately paying off this crushing debt. Unfortunately, not all methods of credit card debt consolidation end up proving to be good for the consumer. In some cases, trying to consolidate debt can even make things worse.

Benefits of Credit Card Debt Consolidation

Before deciding to look at options for credit card debt consolidation, you should know what the benefits of doing this will be. The biggest benefits of debt consolidation are:

• Reduced stress. You will feel like you’re finally doing something about the problem.

• Smaller monthly payments. Consolidation almost always lowers your monthly payments which means you aren’t as financially strained.

• Quicker debt repayment. The consolidation will allow you to plan to repay the debt and be done with it.

Drawbacks of Credit Card Debt Consolidation

For the most part, consolidating credit card debt is a good thing, but there are some drawbacks and risks to be aware of:

• Credit is freed up. Once the debt is consolidated, you have zero balances on all of those credit cards again. Without will power to not use those cards, you can get yourself into even more trouble.

• You’ll know what you’re dealing with. This is a good thing but many people hate the process of actually looking at how much money they owe.

• Interest rates may go up. If you have some low-interest debt that’s included in the consolidation, the rate on that portion of the debt may be higher than it was before.

Credit Card Debt Consolidation Options

If you are ready to start looking at consolidation of credit card debt, here are the options to consider. Make sure to review the pros and cons of each before deciding how to proceed:

• Balance transfers. If you can transfer all existing debt to just one card then you’ll be more organized with your debt. This is only good if the card has a low interest rate and the balance transfer fee is reasonable.

• Other type of bank loan. People may consider getting a home equity loan or other personal loan to consolidate all credit card debt. This is wise if you can secure a loan with good terms.

• Private loan. Some people are lucky enough to have parents or friends who will pay the debt off for them and accept repayment as a loan. This can be great because it immediately relieves the debt and starts improving your credit. However, there are personal risks involved when you mix money and friends!

• Debt management companies. These are businesses that say they’ll consolidate your debt for you. The reality is that you often end up paying them a big chunk of money for their services and then your credit gets damaged because of their involvement. Be wary of this option.

The key to good credit card debt consolidation is to review the pros and cons of consolidation and to choose the method of consolidation that will benefit you the most.

You were once happily married. You and your spouse shared everything, including your credit cards. You didn’t want money to be a big problem in your relationship so you just both used the same cards and dealt with the bills when they came in and tried not to think about it too much. But the marriage went sour and now that you’re in the middle of a divorce, you’re not too thrilled about the fact that you’ve got all of this credit card debt under your name that was really from purchases that your spouse made. What can you do about it? This is an increasingly common problem so there are more and more solutions in place for couples that are dealing with it.

Here are some of the things that you need to do to divide debt (and avoid future shared debt) when in the midst of a divorce:

• Try to work out an amicable agreement with your spouse regarding who is responsible for paying off which portion of the debt. This isn’t easy; dealing with money issues is tough even in the best of relationships. However, it makes the rest of the process go a lot more smoothly if it can be done. Sit down, calmly, with an organized file of the expenses and see what can be resolved.

• Bring in mediators. If you can’t resolve this on your own, you’re going to need to get your lawyers to resolve the issue with you. Come to the table with clear records of what the expenses were that caused this debt. Highlight all of the debt that you feel solely responsible for (your husband really doesn’t need to pay for your $500 shoes) and mark all of the debt that you feel partially responsible for. This will be a good starting point for the mediators to assist you in reaching a final decision on who pays what.

• Get it in writing. You want to make sure that the final decision on who pays what is going to be legal so write it into the settlement agreement. Make sure that you include a clause about what legal actions can be taken against your spouse if he fails to hold up his end of the bargain and causes harm to your credit rating.

• Contact the creditors together and ask that the debts be legally transferred to the individual who is going to be responsible for them. Some creditors will refuse and continue to hold you both liable but most are used to this situation and will be amenable to the transfer of liability.

• Put a “hard close” on the account. You can’t close a credit card account that has outstanding debt but you can do a “hard close” which means no new charges can be made. This is a smart move when divorcing to avoid additional debt from being incurred.

Make sure to take responsibility for making on-time payments regarding your own portion of the debt. This will allow you to avoid future legal issues with your spouse and will also help you to build good credit as a single person.

As we start to get older, we worry a lot about what’s going to happen to our finances after retirement. The majority of people are terrified about entering retirement with a lot of debt under their belts. It’s true that you’re going to want to reduce the amount of debt that you have as much as possible before you retire. However, you don’t want to do this at the expense of setting up a retirement fund for yourself. It’s worse to enter retirement with no debt and no savings than it is to enter it with both debt and some savings. As a result, it makes more sense to save towards retirement than to pay off credit card debt in full.

The major reason for this is that most people have so much credit card debt that it is unrealistic to expect to pay all of it off before retirement and to still be able to sock away some savings. You don’t want to spend your entire working life paying off that debt only to find yourself facing retirement without any sort of income to invest in your future. As a result, you want to work at creating a savings account that will generate interest while it creates future financial stability. You’ll still want to work towards paying off your debt but you don’t want to solely target the debt while ignoring your retirement fund.

The key here is to make smart investments of your money that are going to yield more for you in the long run than you’re going to get if you just pay off your debt. This involves a two-step process in which you reduce the interest rate on your debt while simultaneously increasing the interest rate on your savings. This will allow you to generate more money in the long term than you would if you were simply paying off your credit card debt but not putting any money into savings.

In order to be able to maintain your credit card debt into retirement without facing significant financial consequences, you want to do all that you can to lower the interest rate on the debt. The best option is to consolidate all of your debt into a loan that offers a lifetime of low interest. This is better than a short-term zero interest loan consolidation if you’re trying to plan for long-term debt. Consider options that include home refinancing and other credit card debt alternatives as these are more likely to offer long-term low interest rates than cards will.

Use the extra money that you’ve been paying towards the credit card debt to invest in savings accounts that are going to offer you more interest than what is being taken away by the debt. For example, if your debt has an interest rate of 5% but you can find an investment savings account that yields you 10% interest then you’re going to be financially better off putting your money into that savings account than you are if you use it to pay off the debt. As you near retirement, you need to think long term and that doesn’t always mean paying off credit card debt immediately.

If you are a credit card company, you want to make money. The way to do that is to get yourself a large number of customers that are going to have bad credit card habits which allows you to ping them with numerous fees and raise their interest rates on them. As a credit card consumer, you want to make sure that you don’t benefit the credit card companies by becoming one of these customers. Avoiding fees and penalties on your credit card can keep your interest rates low and make sure that your money stays in your pocket instead of going to fatten the wallets of those folks who issue credit cards.

The way that most credit card offers work is that they’ll start off with a great deal that entices the customer to apply for the card. The deal isn’t a scam; it’s usually very real and straightforward and can work exactly as planned for those customers that are willing to follow the rules. The problem is that most customers fail to follow the rules and that’s where the fees and higher interest rates start to come in. In other cases, the deal is real but only to a certain point; that’s the case with low introductory interest rate offers which customers often fail to realize are going to run out eventually.

The first problem that faces credit card consumers in regards to this type of situation is that they manage to make mistakes that cause the great offer from the company to be null and void. The most common situation is the late payment. Many credit card companies offer a terrific low interest rate on the condition that payments are made on time. One late payment and you’ll find yourself with a new interest rate that is significantly higher than the original offer. You’ll also be fined with late-payment fees. And if those fees happen to put you over your credit limit, there’s going to be an additional fee for that. All of these fees are perfectly valid from the standpoint of the credit card company - and they can all be avoided by being fully aware of the rules of the credit card offer when you apply for the card.

The second problem that credit card consumers deal with in regards to this issue is that they fail to notice the limitations of a good credit card offer. One common case is the zero percent introductory APR which runs out after six months; the person who fails to notice the time restraint may keep on racking up debt after the six months is over at a much higher interest rate than planned. Another issue is the transaction fee; a balance transfer at zero percent is great but may not be if it comes with a 3% transaction fee.

Both of these situations can be avoided simply by reading the fine print on your credit card deals before you sign up for them. If a deal sounds too good to be true, it probably has some sort of catch. If you know what the catch is, you can usually avoid being trapped by it. The people who pay attention to the rules will be able to take advantage of the best offers. These aren’t the customers that card issuers want but they are the kind of customer that you want to be.

Your credit cards are making you sick. Literally. If you have credit cards then you almost certainly have credit card debt. That debt is eating away at your body and mind from the inside out. It’s giving you headaches. It’s causing anxiety. It is the reason that you have that constant ache in your muscles and the reason that you catch every cold that is going around. There’s a good chance that it’s the source of your depression. And there may be some even more serious health problems that are directly caused by the fact that you are trying to deal with your debt.
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We all know that the two biggest things that couples fight about are sex and money. You may think that sex has the potential to be the bigger problem of the two since the problem of cheating spouses is one which has been breaking up marriages forever. However, the money issue may be sneaking up on you from behind and destroying your relationship from the inside out. Credit card problems and the debt that they can create are significantly worse on relationships than sexual indiscretion. (more…)

The key to not getting into financial trouble is obvious: don’t spend more than you make. Of course, almost everyone who uses credit cards is violating that rule and that’s why we’ve got so much credit card debt in our society today. It may make you miserable to think of the thousands of dollars that you owe on your cards. But brighten up; things could be a lot worse. (more…)

One of the biggest things that married couples fight about is money. And within that category, credit card debt is a number one source of financial stress. Couples argue about their credit card problems for many different reasons. Getting to the root of those reasons can help you to learn how to better communicate about your debt. And communication is going to be the key to resolving the problem. (more…)

We all know that having excessive credit card debt is a bad thing. It can put a financial crunch on your life and cause you significant amounts of stress. It can also create problems with your credit history and make it difficult for you to obtain the loans that you need to have a comfortable life. However, most people don’t really think about the full extent of how credit card debt impacts them on a daily basis. Sometimes just taking a look at this information can help to motivate people to get their credit card debt under control. (more…)

Who do you talk to about your credit card debt? Some people don’t talk about their credit card debt with anyone, causing them to let negative feelings about it fester inside of them. Others talk about their credit card debt with everyone they encounter, even when it may be inappropriate to do so. If you fall into either extreme, you might want to think about the consequences of inappropriately addressing credit card problems in your every day conversations. (more…)