Your Credit Card And Debt Consolidation

How to manage Debt consolidation with credit cards

Knowing how to manage your credit card and debt is a key financial skill. UK nationals carry huge levels of personal debt. Overall indebtedness is well over £1,000 billion pounds. However, used correctly, your credit card can be a key part of a debt consolidation strategy and can even help to eliminate credit card and other debt altogether.

With online credit card application, it is easier than ever to get hold of a credit card to help with debt management. To get a credit card, whether online or offline, applicants have to provide their name and address, as well as details of their home ownership and employment status, banking details and information about any other credit that they have. This information is used for credit scoring. The credit card deal offered will depend on whether the applicant has clean, impaired or adverse credit.

One way of using a credit card for debt consolidation involves 0% APR credit cards. This rate is often offered to new cardholders as an incentive offer. It may last for anywhere from six to 12 months and in some cases, is available for purchases as well. Credit card and debt management doesn't get much easier, though it is essential to be organised. Here's how it works.

Credit Card Debt Consolidation.

Once the cardholder has got a 0% APR credit card, he or she can consolidate existing debts by transferring balances from other credit cards, store cards and loans to the new 0% credit card, up to the maximum of the credit limit. Remember to allow for the balance transfer fee of 2% or more charged by some card issuers.

This will leave the balance on one credit card and debt repayments will pay off the sum owed rather than just interest. Once the preferential 0% rate is coming to an end, it's time to move the outstanding (but much reduced) balance to a new 0% deal. Just fill in a new online credit card application six weeks before the end of the offer period and transfer the balance as soon as the new card arrives.

This practice is known as serial switching, credit card tarting and rate surfing. Many people have used the strategy successfully to eliminate their credit card debt altogether without paying any interest. Many credit card issuers now charge a balance transfer fee to compensate themselves for the interest they lose on 0% APR credit cards.

In spite of this fee, serial switching can be an effective way of reducing overall indebtedness. The key to doing this well is to make the required payments on time and in full, so that there will be no difficulty in getting another 0% card when it's needed. Credit card and debt management has never been so easy!