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Consolidate reward credit card debt

People who are in debt (reward credit card debt) often get to hear this advice ‘Consolidate reward credit card debt’. So, what does that ‘Consolidate reward credit card debt’ mean? Well, pretty simply, ‘Consolidate reward credit card debt’ means consolidating the debt on various reward credit cards into one (or two) reward credit card. This consolidation can be done either through a low interest bank loan or by transferring balance to a new reward credit card (i.e. transferring the amount you owe, on one or more reward credit card, to a new reward credit card(s)).

So what should you do when you are looking to consolidate reward credit cards? Well, the key thing to look for is the APR or the annual percentage rate. Whatever method you adopt to consolidate reward 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 reward credit card debt, the interest rate on the bank loan should be lower than the APR of the reward credit cards whose debt you are consolidating. Similarly, if you are moving to another reward credit card, you must make sure that the APR of the new reward credit card is lesser than the reward credit cards whose debt you are consolidating. However, there is a catch that you must be aware of when laying a plan to consolidate reward credit card debt. The APR rates advertised by most reward credit card suppliers are the short term APR rates which are meant to lure you to consolidate reward credit card 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 reward credit card debt with these reward credit card 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 reward credit card debt will be fruitful only if the new APR rate is lower than or equal to the APR on your current reward credit card. You might check with your current reward credit card 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 reward credit card debt you should understand that consolidating reward credit card debt will be beneficial only if you pledge to adopt and follow disciplined approach to reward credit card usage i.e. controlled spending and regular/timely payment of reward credit card dues.

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