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Review Your Situation to Make a DecisionCredit card debt consolidation is effective when consumers combine many high-interest credit cards into one lower interest loan. Credit card debt consolidation, however, is not always the best possible move for consumers to eliminate debt. Your individual financial situation will determine what mode of debt relief will work best for you. Credit card debt consolidation offers consumers lower interest rates, which saves money and provides lower monthly payments. But, if a consumer decides to pursue credit card debt consolidation and combines all credit cards into one loan, the process could backfire and create more costs. For example, a consumer holding five credit cards - all with large balances - and two of the cards carry interest rates at 8.5 percent, while the others carry rates at 15 percent. It may not make sense for the consumer to combine all five cards onto a credit card debt consolidation loan with a 11 percent interest rate because the average interest rate on all five cards is 12.5 percent. Consolidating low-interest credit cards into a higher interest credit card debt consolidation loan will cost the consumer more money. The goal of credit card debt consolidation is to reduce interest rates, so consumers should only consolidate cards that yield higher interest rates then the loan. Credit card debt consolidation also is not effective when consumers combine small amounts of debt. If a consumer has less then $400 or $500 in credit card debt, then, usually it is a more effective option for the consumer to pay off the cards directly to the company. Credit card debt consolidation is a good decision in most situations, but consumers should avoid consolidating the wrong types of debt. You can settle your debts today. Drew Johnson is an expert in the various methods of debt reduction and has successfully reduced his own debt. He has written about various debt relief topics. Credit Solutions provides an alternative to consolidating your debt.
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