Credit Card Consolidation
Posted January 28th, 2009 Credit card consolidation can be a real lifesaver if properly used. No matter how you amassed your credit card debt, you need to get it under control and credit card consolidation is a great tool to get out from under it.
One way to consolidate your credit cards is a secured loan from a bank. But what if you don’t have collateral? If you don’t own property or your automobile isn’t paid for it will be very hard to qualify for a consolidation loan.
It may be easier to apply for a zero or low interest balance transfer card. These are credit cards but you are able to transfer all of your debt onto one of these cards and make one payment a month instead of many. The payment will usually be lower than your former payments combined amount, easing your financial burden and at the same time taking positive steps toward paying down your crushing debt.
When you apply for a no or low interest card it will be about the same experience as when you applied for your credit cards. However, you’ll be scrutinized much more closely. Your debt to income ratio will be calculated, you’ll have to disclose your assets and liabilities and your credit score will have a much greater impact now than it did when you first applied for your credit cards. Since the card issuer is taking more of a chance-trusting a person who is already in debt to repay all of those funds-you may have to try more than one issuer to get accepted.
Once you apply for and receive a balance transfer card, you’ll usually have sixty days in which to make the transfer. If you miss that deadline the regular interest rate could kick in, negating the benefits of the card.
When you successfully move all your balances onto your new card, you will have one monthly payment with significantly lower-or no-interest. This can save you hundreds of pounds a year and perhaps thousands over the lifetime of the loan. Make sure that you know how long you’ll enjoy those low rates, though. Most cards limit the low rate, anywhere from six months to eighteen months. Watch the date carefully, too, as the issuer will not remind you that it’s about to kick in those higher rates.
If you cannot get your credit card consolidation paid off before higher interest begins to apply, start looking for a similar card six weeks before the interest deadline. Some people go through three or four cards before they successfully conclude their credit card consolidation, but they do manage to get it paid off by using these cards.
As with every other financial tool, be sure you understand all the terms and conditions of your card. Know what penalties there are for late payments or missing one altogether; those things often trigger high interest rates and may be combined with fees that are unexpected if you haven’t read all the fine print before you sign the contract.
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Comparison of Top 10 Credit Card Offers
| Credit Card | Card Details | Interest Rate | Cash Advance Rate | Balance Transfer Rate | Annual fee | Interest free days | ||
|---|---|---|---|---|---|---|---|---|
 Halifax All in One Credit Card |
The Halifax All in One credit card offers a great introductory rate, and is perfect for saving you money now as well as in the future. | 15.9% APR | 27.95% p.a. (variable) | 0% for 9 months | No Annual Fee | 59 Days interest free |
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 Virgin Credit Card |
As well as a great rate, the Virgin Credit Card comes with:
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16.6% APR (variable) | 27.9% p.a. (variable) | 0% for 16 Months (2.98% fee on balance transfers) | No Annual Fee | 50 days on card purchases |
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 Capital One Classic Visa |
This card is designed for people with bad credit ratings, this is why the rate is quite high. |
Typical 34.9% APR variable | 34.9% APR | 34.9% APR | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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As well as earning Flying Club miles which you can spend on brilliant rewards like flights, upgrades, car hire and more, a Virgin Atlantic Credit Card gives you up to 46 days interest free on card purchases. |
17.9% APR typical rate | 20.9% p.a. (variable) | 0% for 6 months (2% handling fee) | No Annual Fee | Up to 46 days on card purchases only. |
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The Virgin Prepaid MasterCard from Virgin Money is a prepaid Mastercard that you can add funds to, and use these funds for normal purchases. |
N/A | N/A | N/A | N/A | N/A |
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5% cashback on purchases in your first three months (up to £4,000 of spend). Thereafter, earn 0.5% on the first £3,500, 1% on £3,501 to £10,000, and 1.5% after £10,001. |
18.9% p.a. | 27.9% p.a. | 18.9% p.a | No Annual Fee | 56 days for purchases. 0 days for balance transfers and cash. |
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Vanquis Visa Card is designed for people with no credit history or who have previously had bad debt. Representative 39.9% APR (variable) |
Representative 39.9% APR (variable) | 39.9% | N/A | No Annual Fee | Up to 56 days on card purchases only |
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The award winning prepaid card with no credit check or bank account needed. | Funds in your Account will not earn interest | Prepaid only - N/A | Prepaid only - N/A | £59.40 p.a. (£4.95/month) | Prepaid only - N/A |
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