When you're drowning in outstanding debt, you may be swayed by late-night television commercials that promise to alleviate your debt through debt consolidation services. Before you pick up the phone to ask about this option, consider the fact you might end up paying more for the fees and services of a debt consolidation company. Financial experts like Brad Stroh, managing partner of Bills.com, know the best way to consolidate credit cards is through a balance transfer to put you in charge of your debt management.
Step 1
Compare offers from several credit card companies. Look at the lowest interest rate available, and read the fine print. That low interest rate could just be promotional, with the rate sky-high after a few months. Choose the card with the best rates and the best terms. Choosing a lower interest rate means more of your money goes to paying off principal rather than interest points out financial website BankRate.com
Step 2
Call the credit card issuer for the offer you've selected, and indicate you'd like to complete a balance transfer. Ask about the fees for a balance transfer; some credit companies require you to pay a percentage of the balance in lieu of a transfer fee. You can negotiate with the card for a better rate by letting them know you are shopping around for the best deal.
Step 3
Ask the customer service representative for the terms and conditions of the balance transfer to be faxed or mailed to you. Seeing them in print is a helpful way to make sure you're comfortable with the terms, conditions and fees of a balance transfer. If you are satisfied with the terms, call the credit card issuer and give them authorization to complete the transfer. You'll need to give them the account numbers of your other debts.
Step 4
Pay off debts with your new credit card if you can't do it via account number. Once you've paid them all off, you'll just need to make payments to the credit card which now holds all of your consolidated debts. Make sure to always pay on time, otherwise your interest rate could skyrocket, and you could get slammed with fees and a ding to your credit score.
Step 5
Use more than one credit card to consolidate debts, recommends Lynne Strang of the American Financial Services Association Education Foundation. Even two credit cards that hold all of your consolidated debts are easier to manage than a bevy of bills and payments at the end of each month.
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