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Using credit cards require strict financial discipline and timely bill management. Failure of this will lead to accumulation of debts because of the high interest rates that the credit card unions charge. There are many ways in which a credit card debt can be managed, and credit history can gradually be improved. Credit card debt consolidation is one of the most common ways of dealing with a credit card debt.
Credit card consolidation is not the same as debt management. Debt management involves companies that help people manage debt and charge a fee for their services. It mostly involves negotiations with the credit card companies to reduce the outstanding balance which can then be paid off in full or installments. Debt consolidation on the other hand involves clearing off all the outstanding balances of multiple credit cards by consolidating all the balances into one account. This can be done in two different ways:
Debt consolidation can be done easily by opening a new credit card, and paying off all the outstanding balances of other cards. This works just like balance transfers, but does not necessarily involve zero percent interest rates. But managing debts and paying back becomes easy since there will be a fixed monthly installment that should be paid to the new credit card. Also, the interest rate will be fixed, until the new credit card is used on any new purchase. It is important to avoid using this card for new purchases since the rules change completely for a new purchase. Any payments made towards the credit card will be used to cover the consolidated outstanding balance, so the chances of accumulating higher debts are more.
The other way of getting on with debt consolidation is to obtain a loan from money lenders, and pay off the outstanding balances. This requires some ground work before choosing money lenders, because the interest rates are very different and depends upon individual money lenders. With some research, loans with lowest possible interest rates can be obtained, and easily paid back in monthly installments. One advantage of obtaining loans from external sources is that the credit checks are not mandatory and so interest rates do not depend on credit scores. Using a loan broker to find loans with best interest rates can work out economical, but finding brokers who charge a reasonable fee for their services is requires some effort.