Pros and cons of consolidating credit cards
Consolidation works best as part of a larger plan to become debt-free; it shouldn’t just be a way to buy some breathing room.
If you are consolidating debt just to get a lower interest rate without really knowing how you’re going to pay the debt off, then you are simply moving the problem around instead of facing it.
Any savings you get from a lower interest rate need to cover the transfer fee.
You might also take on new annual fees if you open a new credit card.
Personal loans will carry the biggest benefit if you’re currently paying high interest rates on scattered accounts. Lower interest rate If you can lower your interest rate by at least 2%, a personal loan could save you quite a bit of money in interest charges. A single payment If you hold debts on multiple credit cards, and you consolidate this debt through a personal loan, you’ll simplify your debt payoff.
You won’t have to worry about various payment dates and amounts.
Credit card balance transfers are most attractive when you know you will pay off debt quickly. When it comes to common consumer debts like credit cards and personal loans, two of the most popular ways to lower your rate include balance transfers and debt consolidation loans. They both have advantages and disadvantages, but you can make an educated decision once you look at the fees to borrow and how your debt is set up currently.Transferring a balance using a credit card is easy, and ideally you can pay 0% interest on your debt (at least for a limited time).Debt consolidation is nothing more than a con because you think you're starting with a clean slate.But the truth is the debt is still there, as are the habits that caused it—you just moved it!