Credit Card Consolidation

Can Consolidating All Your Credit Card Debt onto a Low or Zero APR Credit Card Save You Money?

Is it worth it to consolidate your credit card debts onto a low APR card? The answer is probably, but you always have to be aware of the fine print.

The idea is to apply for a low or zero APR card and transfer all you other credit card balances to the new card. You then destroy the old cards, close the accounts and don't open new ones.

With some credit cards carrying interest rates of 20% or more, it sounds like an attractive option.

So what's the problem?

First of all, if you have a bunch of cards with high APR's, what are your chances of getting a low or zero APR card?

It's possible that some people with high credit scores were just careless in their choice of cards and are paying these rates. However, low rate deals have been around for a while now, so this seems a little unlikely.

However it is true that store credit cards are usually quite expensive.

If your credit score is poor, your odds of getting a good credit card deal are pretty bad.

Next, what is the term of the low or zero APR deal? Does it last only six months or a year? If so, what does the rate jump to? If it isn't substantially lower than what you're paying now, why bother?

The problem is that a lot of these special intro offer cards will carry higher than normal rates once the offer expires. There are credit card companies that offer these special deals for the life of the balance transfer, so look into those first.

Learn more about the pitfalls of low and zero APR credit cards here.

The final problem is one that plagues all debt consolidation plans. You reduce your payments, you feel rich and you go out and start charging again.

By the end of the day, you're worse off than before.

If you have good credit and can qualify for these deals, be careful. Try to pay off your debt before the higher rate kicks in.

Or go for a premium card that offers life of the transfer low rates.