When a person is having too many credit cards, he or she has high possibility to end up with overspending and getting drowned in debt.
In order to fix these problems, debt consolidation plan is provided to help the card holders to overcome financial difficulties.
Many people don't know what this concept is about.
To be precise, this plan is intended to assist debtors to reduce high interest rates, lower monthly payments and avoid themselves from bankruptcy.
Let's see how it works.
When you have multiple credit cards with different interest rates, you are advised to apply for a debt consolidation with an opportunity of transferring your outstanding balances from current high interest cards to a sole account with reduced interest.
In general, the new interest rate after consolidating all your debts is usually much lower than your current rates.
You can negotiate with your creditors if you find that the interest rate offered is not satisfactory.
Once the new rate is fixed, you should start paying down the new consolidated balances on time.
It would be ideal if you can afford to double the minimum payment on the old balances.
It is vital to take advantage of the lower interest rate to pay more every month in order to eliminate your total debt in a shorter period.
Credit card debt must be taken care of seriously although it is an unsecured debt.
In order to obtain financial freedom in a faster pace, you are advised to seek professional advice from financial counselors or debt consolidation service providers, especially when you don't have any knowledge in managing personal debt.
In general, the sooner you get out of debt, the more you save from the interest rates.