07.31.09
Deciding Whether To Consolidate Credit Cards or Not?
Paying for a lot of credit cards can be tough. For some people, paying for only one is already a painful thing to do as far as spending is concerned; adding more just makes it depressing. Also, when you get billed at different days of the month, month after month, it feels like you’re always paying, and continuously being drained off your hard-earned money.
The power of fusion
A lot of people in the US try to solve this psychological glitch by consolidating credit card debt. When you consolidate credit cards, all your credit card bills will be gathered, then merged into one and understandably huge credit card bill. This type of service has worked for numerous people with positive results, mostly parents who can no longer stand the stress and inconvenience in having to pay a lot of credit card bills at different times of the month. Others, on the other hand, have had regrets doing so. Like all financial services, a lot of factors have to be considered, which is why there will always be its share of advantages and disadvantages. This article discusses both sides of the coin and leaves the decision whether to consolidate your bills or not, up to you.
Advantages
One obvious advantage when you consolidate credit cards is having a more organized billing system. Receiving multiple billing statements not only gives you a heightened feeling of irritation, but it can also confuse you, which in turn can cause you to overlook one or two bills. As a result, you would get penalized and be charged with non-payment fees. This can be costly as it can increase exponentially if repeated over the next few months. Consolidating credit allows you to pay for only one bill, which gives you absolutely no chance of missing one. This also means you’d be paying all your bills on time, which in turn would save you from late fee penalties. There is a natural sense of accomplishment when bills are paid on time, and credit card bills are no exception.
Another upside is you actually get to spend less money than when you do when all bills are paid separately. This is so because consolidation agencies negotiate for lower rates with the credit card companies in exchange for their services. So even though you incur additional costs by using the consolidating agency’s services, you still end up paying less because the lower interest rates are passed on to you.
Disadvantages
There are also a couple of drawbacks when you consolidate credit debt. Firstly, a consolidation loan that appears on your card can negatively affect your credit rating. Although some couldn’t care less about credit ratings, this may affect anyone in the long run. Should a person choose to take out another credit card, the company may think twice before giving him an approval. Should he apply for a loan, the lender might deny the application due to his bad credit history.
Secondly, not all your loans may be included in the consolidated bill. Some banks in the US are not legally obligated to work with consolidation agencies. In fact, some lending institutions prefer this set up. This simply means that you’re not completely safe from all bills as there may be ones left out.
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