Consolidating credit card debt is still fairly easy to do. While some people consolidate debt to have only one or two cards to make payments on, most people transfer balances of their cards to a lower interest card to save money, reports the financial experts at Bankrate. Providing your credit report is in good shape, consolidating these debts is not too difficult to accomplish.
Step 1
Make a list of all your current cards, the balance owed, the interest rate and incentive programs each card may offer. Use this information to determine your entire credit card debt and to see which of the cards you already have and has the lowest interest rate.
Step 2
Choose the card with the lowest interest rate and check other credit card sites for lower interest rates. If you find a card with a significantly lower interest rate--even if it is an introductory rate--use this information to call your credit card company to see if they will match the rate. Tell them that you intend to consolidate your credit card debt onto this card. It is easiest to consolidate debt onto an existing card because there is no additional approval process. Make sure to find out if there are different fees or interest rates for a balance transfer.
Step 3
If your credit card company will not meet the lowest rate of another card, apply for a card with the new company. Before you do this, it's a good idea to get a copy of your credit report to see if there is anything that might prohibit you from being approved by a new company or that would prohibit you from getting the introductory rate. These things would include late payments on other cards or a bankruptcy. There is no harm in applying for the new card, especially if you can explain a credit lapse with your application. Make sure you know the rate you'll be getting prior to accepting the card, as, according to financial expert Suze Orman, rates can be different for transfers and new purchases.
Step 4
Transfer your debt onto your new card. Most credit card companies will send you checks that you can write to your other credit cards to zero the balances on those cards. Write a check for the full amount owed and send it in, as if you were paying the card off in full. The amounts of each of those checks will be consolidated into your new account, usually without a fee from the card where the balance is being transferred. Other companies handle the transactions electronically.
Step 5
Don't deactivate the other cards if you've had them for a long time, said Suze Orman, as it will usually lower your FICO score (which banks use to determine loans) because credit history accounts for 15 percent of the score. Even if you never intend to use the cards again, it is better to keep the accounts open.
Tips and Warnings
- Cost out the incentives against the interest rate on a card. If the card is making money for you, you might want to transfer balances to that card and use it.
- Make sure to check your credit card statement each month to see if your rate has changed. Rates can change if your payments are late or if you have reached the end of your introductory period.
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