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When is Credit Card Consolidation a Good Idea?

consolidated credit cards

You’ve heard many advisors say that taking on new debt is a bad idea. There are, however, times when it’s not only a good idea, it’s the best choice for your situation.

When is credit card consolidation a good idea? Read on to find out.


1. Too Many Payments to Keep Track Of

If you have many credit cards, especially if they each have different due dates, it may make sense to consolidate the payments. Even one accidental missed payment will reflect on your credit report for two years.  A debt consolidation loan lets you pay your individual cards down, leaving you with only one payment per month.

2. You’re Drowning In High Payments Each Month

Too many credit card payments equal paying far more money than you can comfortably spend every month. To keep your head above water, you may be paying only the minimum payment on each, which will extend your debt and cost you even more. A consolidation loan payment is typically only a fraction of your total credit card payments, meaning you will have extra money each month.

3. You Can’t Make Headway on Your Debt

If you’re stuck in a situation where you can’t make any headway on your credit card debts, it’s because the interest rates on these cards can be crippling. You may be paying double, or even triple, the minimum payment and never see any real decrease in your outstanding balances. High interest rates will continue to compound each month, keeping your balances high despite paying large amounts on them each month. A debt consolidation loan may be a great way to make real progress on paying off your balances.

4. Your Interest Rates Are Ridiculously High

Interest rates on credit cards can be extremely high, especially if you have less than perfect credit. A loan will typically have a lower interest rate than these cards, which means you will be paying less overall throughout the life of the loan than you will if you continue to pay down the individual credit card balances. 

5. You Need a Bump In Your Credit Score

The perfect formula for a great credit score is to maintain both overall and individual balances of no more than 30% of your available credit. A loan creates a hard inquiry on your credit report, but you may also see a jump of several points by paying the balances on your revolving credit. Loans are also a good way to diversify your credit. It’s important to consider that a new loan will decrease the age of your credit history, which averages the dates each credit source has been open. Lenders typically like to see older, current accounts in a credit file.

6. You Want to See the Light at the End of the Tunnel

Credit card debt is tricky. You pay and pay the balance, with no relief in sight. The terms aren’t always fixed, and in fact, aren’t always clear. A single missed payment may throw you into an entirely new, higher, interest rate. A fixed term, fixed rate debt consolidation loan from a reputable financial institution like Bay Country Financial Services lets you circle the date on your calendar when you will be debt free. 

Thinking of Debt Consolidation? Think of Bay Country Financial Services

Debt consolidation loans from Bay Country Financial can be the answer you need to your mounting credit card debt. Our secured loans feature:

  • Same-day approval
  • Amounts of up to $50,000
  • No application fees
  • Convenient loan options
  • Options to fit your budget
  • Fixed terms and rates for predictable billing and payments

Individuals with poor to fair credit are encouraged to reach out to talk to a loan specialist and get started on the road to financial recovery.