Consolidate Credit Card Debt - Is it worth it?

"You are in the driver’s seat of your life and can point your life down any road you want to travel. You can go as fast or as slow as you want to go …and you can change the road you’re on at any time."
-Jinger Heath

It can seem like you’re moving forward when you choose to consolidate credit card debt. You may do it because you hope to save money, or because staring at a lot of bills month after month has gotten overwhelming. Yet are you really doing anything to improve your situation, or are you just delaying the inevitable in a very expensive way?

Credit card consolidation loans are not something that banks offer out of the goodness of their own heart. They offer them because they make the bankers money. The interest rate may go a bit lower when you consolidate credit card debt, but in general, the term of the debt is extended, meaning the banks will make more money on your debt over time—and you will lose more money than you would have otherwise.

Not As Easy As You Think.

It can actually be very difficult to qualify for credit card consolidation loans. Don’t overlook the risk factor, either. By consolidating credit card debt you are trading unsecured debt for secured debt. That means either your house or your car, in most cases, are used as collateral. If you get in over your head again you stand to face foreclosure or repossession, putting you in an even worse position than you were before.
Sometimes credit card companies try to convince you to consolidate credit card debt by engaging in balance tranfers—taking all of your credit card debt and transferring it to a new, higher limit card. Usually there is some sort of “teaser” APR rate involved. Of course, you’re not going to pay off that debt before the teaser rate expires, and the interest rate, when it hits, will get calculated on the new, higher balance and put you even deeper in debt than you were before.

When you Consolidate Credit Card Debt, you Deceive Yourself.

Credit card consolidation loans may make you feel like you’re doing something about your debt problem, but in reality you’re just moving paper around. You’re trying to put the problem out of sight and out of mind rather than addressing the problem directly, or taking steps to figure out what habits you have that put you into credit card debt in the first place.
While there are financial tricks that can help you get ahead of debt, like using money merge accounts, they are not going to help you unless you are willing to examine and take hold of your spending habits. Though it can be difficult to get things under control at first, every month that you track your spending and try to do better is a month that brings you closer to prosperity and a debt free lifestyle.

Debt Consolidation Lenders Make Commission!

A slick loan officer might present many good arguments in favor of leading you money to consolidate credit card debt. He’s hoping you’re not aware of his 10% commission, which you pay for. He has no motivation to give you the full picture and every motivation to obscure what’s really going on.
Some plans to consolidate credit card debt are even sold through multi-level marketing schemes! Are you truly going to place your financial life in the hands of someone who isn’t even a trained financial professional? Just how comforting is that lower monthly payment?

Stop Thinking in Terms of Monthly Payments.

One of the great traps of our debt culture is that we’ve been eased in to thinking in terms of monthly payments. Again, when you consolidate credit card debt you do get monthly payments—but you will never get out of debt on monthly payments! Financial freedom comes from being able to pay for and own things that you paid for without taking out any sort of credit whatsoever. Find a plan that will help you accomplish that goal rather than being sucked in by a scheme.