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Climb Out of Credit Card Debt Through Debt Consolidation

The average person carries several credit cards and runs a balance on each every month. This can translate into some pretty hefty charges over an extended period of time. That's great for the credit card company, bad for you.

Ever catch a slight whimpering from your mailbox once a month? It's your bank balance crying out for debt relief. Let's help it out with some much needed free credit counseling — stat!

Here's the way it works: Major credit card companies charge several percentage points annually on interest (think around 18%). This is the way they earn money — lots of it! The larger the carried balance, the more money they earn. It doesn't stop there, though. Many lesser-known guys, usually stores offering their own cards with the lure of "no interest for six months," can go even higher with rates — up to 24%! (Hey, they have to pay for those expensive commercials one way or another.)

Unlike what we're led to believe, credit cards are not "free money." If you're not careful, it can be easy to fall into debt's black hole. But, there is good news. Digging your way out is possible.

Navigating the Slippery Slope of Credit Card Debt

Let's say you're carrying a balance of $1,200 every month on several cards. Sound like a lot? It is. But it's easy to lose track of how much you owe when it's divided and spread out. $200 here and $300 there... This is what many people do, especially college students who can quickly rack up bad credit debt after many a pizza night.

Now let's assume each card charges at least 18% annually, and you only make a low minimum payment each month. After all, your bills are then paid, right? Correct... sort of. Just get ready to repeat that process for the next decade (plus pay over $1,000 in interest!). As you can see in the chart above, you're practically taking one step forward, only to take one step back.

It's time to break the cycle. There is a better way.

Wipe Away High Interest with Debt Consolidation

A debt consolidation loan can pay off all of your credit cards in one stroke, giving you the immediate debt help you need. True, you can never borrow your way out of debt, but at least you can lock in a much lower interest rate. This can put you back on the right track in several ways.

First, it will give you some much-needed breathing room financially. Secondly, since all of your outstanding debt will be combined into one, easy-to-remember payment, you'll immediately reduce your monthly flood of bills. Fewer bills mean less of a chance to incur late payment charges — and we all know how those can ring up to twenty bucks a pop... each.

Words to the wise: Don't wait. Every day you put this off inches your cumulative charges higher. Remember: Although credit card companies will give you a quote on their annual interest rate, they're still charging you every day you run an outstanding debt outside of its grace period. Get out of debt and nip this in the bud before another week goes by.

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