So what should you do when you are looking to consolidate credit cards? Well, the key thing to look for is the APR or the annual percentage rate. Whatever method you adopt to consolidate credit cards, APR will always be the key; in fact, you could say that it is the sole criteria to look for. So, if you use a bank loan to consolidate debt, the interest rate on the bank loan should be lower than the APR of the credit cards whose debt you are consolidating. Similarly, if you are moving to another credit card, you must make sure that the APR of the new is lesser than the credit cards whose debt you are consolidating.
However, there is a catch that you must be aware of when laying a plan to consolidate debt. The APR rates advertised by most suppliers are the short term APR rates which are meant to lure you to consolidate debt with them. By short term we mean APR rates that will applicable only for an initial period of less than 12 months or some other period after which the APR rates increase. When you go on to consolidate debt with these suppliers, they will offer you a lower (even 0%) APR for the first 6-12 months; and a much higher APR after that. You should check what this higher APR rate is. Your decision to consolidate debt will be fruitful only if the new APR rate is lower than or equal to the APR on your current credit card. You might check with your current supplier to see if he is able to lower your APR (if that works, it will make things really easy for you).
Before you move on to consolidate debt you should understand that consolidating debt will be beneficial only if you pledge to adopt and follow disciplined approach to usage i.e. controlled spending and regular/timely payment of dues.
