Many people with a high amount of credit card debt often turn to low interest credit card debt consolidation. People use credit card debt consolidation loans in order to group all of their outstanding debt into one place with a low interest rate. While this may seem like a good idea it might not be beneficial for everyone with credit card debt.
Even with a low interest rate, a credit card debt consolidation loan may cost you more over the repayment plan timeframe than if you have left your credit card debts separate. While people who have a lot of credit card debt and are finding it unable to meet even the minimum payments may benefit from credit card debt consolidation, there may be a better way to handle this debt.
Many people believe the best way to fight credit card debt is to attack one debt source at a time, from smallest to largest, by paying minimal payments on all but one debt source and, on the debt source with the smallest amount pay as much as you possibly can. There are people who use similar methods by paying off the higher interest rate to the lower interest debt sources, but it all depends on your personal situation as to which is going to be better.
Taking a look at your financial situation is going to be the only way to decide what is best for you. By calculating how much you’ll pay over the lifetime of a debt consolidation loan, with interest, versus how much you’ll pay if you keep your debt separate and attack one source at a time is going to be the only way to find out which method will be the best for you in terms of saving money.
Your end goal should be to get out of credit card debt as quickly as possible and as cheaply as possible, so for many, credit card consolidations may not be the best way to go. However, if you are seeing your credit score drop and are unable to pay your credit card debt separately then a consolidation loan may be your best option.