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Should I Consolidate My Credit Card Debt?

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I remember thinking about credit cards like they were the root of all evil. My parents had used credit cards, maxed them out, and used more. They had endless credit card debt that they struggled to pay off even when they had the best jobs they could have hoped for. I would never use a credit card, let alone two.

Skip forward a few years and I was hit with the reality facing all new adults. I was earning a pittance, paying off student loans, and trying to get my life started. I needed to move out of my parents’ house for their financial sake and my sanity. But I could not hope to do it on what I was earning.

So I applied for a credit card. I needed to build my credit score anyway. It took me a while to max it out, and in that time it gave me a good start at independent living. I stopped seeing credit cards as so bad. They were a necessary evil.

Of course, when I needed some extra cash to help continue living my frugal life while paying off loans and my previous credit card, I took out yet another credit card. And this was not the last.

I now understood my parents far better than I wanted to. Then I came across the idea of getting a credit card debt consolidation loan. This loan would cover all my credit card debt, so that I’d only be paying one lump sum each month. It seemed like a great idea. Here’s why I decided to go for it.

Improved interest rate

The most basic reason for me to go for a consolidation loan was that I would no longer be paying the absurd interest rates I was paying on my credit cards. Credit card debt is, in an ideal world, meant to be short term. The interest rates offered are generally high enough that, if you don’t pay it back soon, you will get stuck with growing debt.

A consolidation loan offered an interest rate that was significantly lower and also fixed. The nightmare of neverending credit card debt could finally become manageable. Furthermore, instead of having different rates to keep track of, all of my credit card debt would be gaining the same amount of interest.

Better credit score

Over the years I’ve been paying back credit card debt, there have been a few missteps. In between cards, I’ve been unable to pay installments, and my credit score has duly suffered. One of the worst things about debt is that the harder you have it, the worse it gets. Those who have enough to pay back their debts get lower rates on new loans, while those who can’t are given higher rates and penalties. Debt is a cycle that feels suffocating, because it just keeps dragging you down.

Consolidation loans can help you to start building back that credit score. You will have to start with a relatively high interest rate, although it should be significantly lower than what you are paying now. But as you make payments, you can get loans with interest rates that get lower. Your credit score grows and things get easier, as it should be.

A manageable debt schedule

When you have a number of credit cards to pay off, it feels like you will be stuck in debt forever. I believed that I would have to get a significant increase or a new job on a higher pay grade in order to ever make a dent in my debt. And if I had carried on paying off my credit cards in the same way, that would have been the case. There’s no way to plan for a time you’ll be debt-free when what you are paying doesn’t even cover the interest.

The consolidation loan changed that reality for me. All of a sudden, I no longer had an unmanageable debt. I had an amount that I could work towards minimizing. It would take me years, but at least I had a schedule. It wasn’t just this massive number that would never budge.

This also adds to the convenience. Being able to look at one loan is far easier than looking at different credit card accounts and adding it all up.

Budgeting

Having a clear understanding of just how much I owed and how I could pay it back gave me a chance to budget much more successfully. Before, it didn’t seem to matter what I cut down on. I wasn’t going to be able to save or reduce my debt, anyway. Now that I had an idea of how to reduce that debt, I had more motivation to cut down on expenses and figure out the perfect budget.

Budgeting is terrible when it feels hopeless. With my debt consolidated, I was actually enthusiastic about it.

Debt consolidation helped me get my credit card debt in order after many painful years. I’m still paying it back, but with a sense of hopefulness, rather than helplessness.


So, what do you think ?